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Behind a Veil of Secrecy:Military Small Arms and Light Weapons

Production in Western Europe

By Reinhilde Weidacher

An Occasional Paper of the Small Arms Survey

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ii Small Arms Survey Occasional Paper 16 Reinhilde Weidacher Behind a Veil of Secrecy iii

The Small Arms Survey

The Small Arms Survey is an independent research project located at the Grad

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First published in November 2005

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ISSN 1661-4445

iv Small Arms Survey Occasional Paper 16 Reinhilde Weidacher Behind a Veil of Secrecy v

Occasional Papers

1 Re-Armament in Sierra Leone: One Year After the Lomé Peace Agreement, by

Eric Berman, December 2000

2 Removing Small Arms from Society: A Review of Weapons Collection and

Destruction Programmes, by Sami Faltas, Glenn McDonald, and Camilla

Waszink, July 2001

3 Legal Controls on Small Arms and Light Weapons in Southeast Asia, by

Katherine Kramer (with Nonviolence International Southeast Asia), July

2001

4 Shining a Light on Small Arms Exports: The Record of State Transparency, by

Maria Haug, Martin Langvandslien, Lora Lumpe, and Nic Marsh (with

NISAT), January 2002

5 Stray Bullets: The Impact of Small Arms Misuse in Central America, by William

Godnick, with Robert Muggah and Camilla Waszink, November 2002

6 Politics from the Barrel of a Gun: Small Arms Proliferation and Conflict in the

Republic of Georgia, by Spyros Demetriou, November 2002

7 Making Global Public Policy: The Case of Small Arms and Light Weapons, by

Edward Laurance and Rachel Stohl, December 2002

8 Small Arms in the Pacific, by Philip Alpers and Conor Twyford, March 2003

9 Demand, Stockpiles, and Social Controls: Small Arms in Yemen, by Derek B.

Miller, May 2003

10 Beyond the Kalashnikov: Small Arms Production, Exports, and Stockpiles in the

Russian Federation, by Maxim Pyadushkin, with Maria Haug and Anna

Matveeva, August 2003

11 In the Shadow of a Cease-fire: The Impacts of Small Arms Availability and

Misuse in Sri Lanka, by Chris Smith, October 2003

12 Kyrgyzstan: A Small Arms Anomaly in Central Asia?, by S. Neil MacFarlane

and Stina Torjesen, February 2004

13 Small Arms and Light Weapons Production in Eastern, Central, and Southeast

Europe, by Yudit Kiss, October 2004, ISBN 2828800571

14 Securing Haiti’s Transition: Reviewing Human Insecurity and the Prospects for

Disarmament, Demobilization, and Reintegration, by Robert Muggah,

October 2005, updated, ISBN 2828800660

15 Silencing Guns: Local Perspectives on Small Arms and Armed Violence in

Rural South Pacific Islands Communities, edited by Emile LeBrun and

Robert Muggah, June 2005, ISBN 2828800644

vi Small Arms Survey Occasional Paper 16 Reinhilde Weidacher Behind a Veil of Secrecy vii

Special Reports

1 Humanitarianism Under Threat: The Humanitarian Impact of Small Arms

and Light Weapons, by Robert Muggah and Eric Berman, commissioned

by the Reference Group on Small Arms of the UN InterAgency Standing

Committee, July 2001

2 Small Arms Availability, Trade and Impacts in the Republic of Congo, by

Spyros Demetriou, Robert Muggah, and Ian Biddle, commissioned by

the International Organisation for Migration and the UN Development

Programme, April 2002

3 Kosovo and the Gun: A Baseline Assessment of Small Arms and Light Weapons

in Kosovo, by Anna Khakee and Nicolas Florquin, commissioned by the

United Nations Development Programme, June 2003

4 A Fragile Peace: Guns and Security in Post-conflict Macedonia, by Suzette

R. Grillot, WolfChristian Paes, Hans Risser, and Shelly O. Stoneman,

commissioned by United Nations Development Programme, and co

published by the Bonn International Center for Conversion, SEESAC in

Belgrade, and the Small Arms Survey, June 2004, ISBN 2828800563

5 Gun-running in Papua New Guinea: From Arrows to Assault Weapons in the

Southern Highlands, by Philip Alpers, June 2005, ISBN 2828800628

Book Series

Armed and Aimless: Armed Groups, Guns, and Human Security in the ECOWAS

Region, edited by Nicolas Florquin and Eric G. Berman, May 2005,

ISBN 2-8288-0063-6

viii Small Arms Survey Occasional Paper 16 Reinhilde Weidacher Behind a Veil of Secrecy ix

Contents

Acronyms and abbreviations ............................................................................................................................................. xii

About the author ................................................................................................................................................................................... xiii

Acknowledgements .......................................................................................................................................................................... xiv

Summary ................................................................................................................................................................................................................ xv

Map: Western Europe .................................................................................................................................................................... xvi

Section 1: Introduction ....................................................................................................................................................................... 1

Section 2: Secrecy ........................................................................................................................................................................................ 3

Research methodology ......................................................................................................................................................................... 4

Section 3: Overview ................................................................................................................................................................................ 7

Small arms ................................................................................................................................................................................................................ 8

Light weapons ................................................................................................................................................................................................ 13

Ammunition ...................................................................................................................................................................................................... 15

Section 4: Country profiles ...................................................................................................................................................... 22

Austria ........................................................................................................................................................................................................................ 22

Small arms ........................................................................................................................................................................................ 23

Light weapons .............................................................................................................................................................................. 23

Sights ....................................................................................................................................................................................................... 24

Company profile: Steyr Mannlicher .............................................................................................................. 24

Company profile: Glock ................................................................................................................................................... 26

Belgium ..................................................................................................................................................................................................................... 28

Small arms ........................................................................................................................................................................................ 29

Ammunition .................................................................................................................................................................................. 29

Light weapons .............................................................................................................................................................................. 30

Sights ....................................................................................................................................................................................................... 30

Company profile: Herstal and FN Herstal ........................................................................................... 31

x Small Arms Survey Occasional Paper 16 Reinhilde Weidacher Behind a Veil of Secrecy xi

Sights ........................................................................................................................................................................................................ 66

Company profile: Saab ....................................................................................................................................................... 66

Switzerland .......................................................................................................................................................................................................... 68

Ammunition ................................................................................................................................................................................... 70

Sights ........................................................................................................................................................................................................ 70

Company profile: RUAG Swiss/Suisse ...................................................................................................... 70

United Kingdom ......................................................................................................................................................................................... 73

Small arms ......................................................................................................................................................................................... 74

Light weapons ............................................................................................................................................................................... 75

Sights ........................................................................................................................................................................................................ 76

Section 5: Conclusion ....................................................................................................................................................................... 77

Appendix ................................................................................................................................................................................................................ 79

Endnotes .................................................................................................................................................................................................................. 84

Bibliography .................................................................................................................................................................................................... 88

Denmark ................................................................................................................................................................................................................... 35

Finland ......................................................................................................................................................................................................................... 35

Small arms ......................................................................................................................................................................................... 36

Ammunition and light weapons .......................................................................................................................... 36

France ............................................................................................................................................................................................................................ 37

Small arms ......................................................................................................................................................................................... 38

Ammunition manufacturing equipment ................................................................................................. 38

Light weapons and ammunition .......................................................................................................................... 39

Optronics ............................................................................................................................................................................................. 39

Company profile: GIAT Industries .................................................................................................................. 40

Company profile: MBDA .............................................................................................................................................. 42

Germany ................................................................................................................................................................................................................... 43

Small arms ......................................................................................................................................................................................... 44

Ammunition manufacturing equipment ................................................................................................. 46

Light weapons ............................................................................................................................................................................... 46

Sights ........................................................................................................................................................................................................ 49

Company profile: Heckler & Koch ..................................................................................................................... 49

Greece ........................................................................................................................................................................................................................... 52

Italy ................................................................................................................................................................................................................................... 53

Small arms ......................................................................................................................................................................................... 54

Light weapons ............................................................................................................................................................................... 55

Ammunition ................................................................................................................................................................................... 55

Sights ........................................................................................................................................................................................................ 56

Company profile: Beretta ............................................................................................................................................... 56

The Netherlands .......................................................................................................................................................................................... 59

Sights ........................................................................................................................................................................................................ 59

Norway ....................................................................................................................................................................................................................... 60


Sights ........................................................................................................................................................................................................ 61

Portugal ..................................................................................................................................................................................................................... 61

Spain ............................................................................................................................................................................................................................... 62

Company profile: Santa Bárbara Sistemas ............................................................................................ 64

Sweden ....................................................................................................................................................................................................................... 65


xii Small Arms Survey Occasional Paper 16 Reinhilde Weidacher Behind a Veil of Secrecy xiii

Acronyms and abbreviations

ATK Alliant Techsystems

DRC Democratic Republic of the Congo

EADS European Aeronautic Defence and Space Company

EU European Union

EUR euro

Eurenco European Energetics Corporation

FAMAS Fusil Automatique, Manufacture d’Armes de SaintEtienne

FELIN Fantassins à Equipements et Liaisons Intégrées

FIST Future Integrated Soldier Technology

FNMI FN Manufacturing Inc.

GIAT Groupement Industriel de l’Armement Terrestre

Indep Indústrias Nacionais Defesa

LFK Lenkflugkörpersysteme

MBT LAW main battle tank light antitank weapon

MoD Ministry of Defence

Nammo Nordic Ammunition Company

NATO North Atlantic Treaty Organization

NISAT Norwegian Initiative on Small Arms Transfers

NORMANS Norwegian Modular Arctic Network Soldier

OICW Objective Individual Combat Weapon

PDW Personal Defence Weapon

R&D research and development

SALW small arms and light weapons

SAK Swedish krona

SIG Schweizerische Industriegesellschaft

TMP tactical machine pistol

USD US dollar

About the author

Reinhilde Weidacher, a Germanspeaking Italian who lives in the Netherlands,

studied political science in Bologna (Italy) and Stockholm (Sweden). Subse

quently, she researched the global military industry for six years at the

Stockholm International Peace Research Institute. Currently, she works as an

analyst for the Stockholmbased company Ethix SRI (Social Responsible Invest

ment) Advisers, primarily screening companies for militaryrelated activities.

She also works as an independent consultant on arms and peacerelated

issues.

xiv Small Arms Survey Occasional Paper 16 Reinhilde Weidacher Behind a Veil of Secrecy xv

Acknowledgements

The contents of this report are, of course, the sole responsibility of the author,

but several people have to be mentioned here as they provided valuable support

in the production of the report.

James Bevan functioned as contact person at the Small Arms Survey and as

main discussion partner. Jürgen Grässlin and André Maertens from Deutsches

Aktionsnetz Kleinwaffen Stoppen (DAKS) and RüstungsInformationsBüro

(RIB) helped to shed light on the activities of the German small arms producer

Heckler & Koch. Michele Brunelli from Università Cattolica (Milan, Italy), as

well as Giorgio Beretta and Roberto Cucchini from Banche Armate and

Missionari Saveriani in Italy, helped the author to understand the Italian small

arms industry.

Summary

Proliferation of small arms and light weapons (SALW) to irresponsible recipients

continues. This study shows that such proliferation is, among others, fed by

West European companies, some of which are among the largest producers of

SALW in the world. Drawing on research conducted from January through

October 2004, this survey maps the production of SALW in Western Europe.

It looks at ownership relations and organizational structures in order to assess

the weight and motivations of the interests that drive continued exports to

controversial recipients. Production of military style small arms in Western

Europe is carried out by companies that have seen significant restructuring

and ownership changes over the past 10–15 years, but have not been inte

grated within the major land arms producers. While companies are strongly

dependent on the US market, relatively smallscale exports to irresponsible

recipients continue. Contrary to the production of small arms, production of

light weapons, in particular manportable guided missiles, is carried out within

some of the largest arms producing companies in Western Europe.

Highlighting the lack of transparency in the sector, the survey compiles

available data on the size of the largest producers of SALW, showing, where

possible, changes over the past 10–15 years. Insufficient information about

the size, structure, and ownership of producers of SALW in Western Europe

is publicly available. Information provided by companies is very poor. The

compilation and disclosure by governments of data on exports of SALW from

Western Europe has improved markedly in recent years. Nevertheless, com

parisons across countries or across time are still largely impossible, as data is

offered in a nonstandardized format.

xvi Small Arms Survey Occasional Paper 16

Map: Western Europe

Reinhilde Weidacher Behind a Veil of Secrecy �

Section � Introduction

A small number of Western European companies are among the most signifi

cant producers and, even more so, designers worldwide of military small arms

and light weapons (SALW). Small arms manufactured or designed by the

leading European companies FN Herstal, Heckler & Koch, Steyr Mannlicher,

and Beretta form the standard equipment of the armed forces of a large number

of countries and are used by government and nongovernment forces in ongoing

armed conflicts around the world. Ammunition manufacturing plants in a

significant number of countries with repressive governments or governments

involved in armed conflicts have been set up by small Western European pro

ducers of specialized machinery. Also, a range of sophisticated light weapons,

including manportable guided missiles, manufactured or designed in Western

Europe, have proliferated all over the world.

Increased attention to the widespread availability of SALW in situations of

conflict has resulted in a wealth of publications in recent years. How can yet

another survey of the Western European small arms industry contribute to

this ongoing debate? Firstly, ongoing changes in ownership and organization

call for continued close monitoring. Overall, the Western European small arms

and ammunition industry experienced severe financial difficulties in the 1990s.

A considerable reduction in size was followed from the late 1990s by signifi

cant changes in ownership and organization. Light weapons production has

been consolidated as a result of the process of restructuring in the wider land

arms industry. Secondly, reliable, relevant, and comprehensive information on

companies’ dependency on different markets continues to be very poor and

highly fragmented. Most small arms producing companies fail to disclose even

basic information about their activities to the public.

This survey provides an overview of the Western European SALW industry.1

It complements a number of studies on SALW production in other regions

that have been published in recent years.2 For small arms, the focus is on the

production of weapons for military use. Production for civilian markets is

� Small Arms Survey Occasional Paper 16 Reinhilde Weidacher Behind a Veil of Secrecy �

touched upon whenever it can contribute to a better understanding of devel

opments within the military and law enforcement sectors.

Two distinctive phenomena, both concerning issues of human security, are

addressed within the ongoing small arms debate: (a) an increase in domestic

firearmsrelated violence in a large number of countries; and (b) the long

overlooked importance of the widespread availability of SALW as a factor in

the initiation, escalation, and continuation of armed conflicts.

Both concerns are legitimate and may in some specific situations be closely

interlinked. The purpose of this survey, however, is limited to attaining a better

understanding of the role of Western European small arms producers in situ

ations of armed conflict; hence the primary focus on military weapons pro

duction.

The questions this report attempts to answer are: Who owns and controls

Western European companies producing military SALW? What is the relative

importance of different markets for small arms and how is this reflected in

the organizational structure of companies? And to what degree are Western

European SALW producers dependent on exports to countries outside Europe

and the United States?

Section � Secrecy

Companies producing small arms—and to a lesser extent light weapons—have

come under close scrutiny by policymakers, NGOs, and researchers as a result

of the ongoing debate about small arms as a factor contributing to the escala

tion and continuation of violence and armed conflict. The increased level of

attention appears to have made such companies even less transparent, as they

fear that any information they might disclose will be used against them. State

ments about the industry’s willingness to ‘be positive and work together’ (Glock,

2002) (with governments and NGOs) have certainly not been turned into practice

with regard to public transparency. Most importantly, however, the SALW

industry shares the traditional culture of secrecy of the wider arms industry. The

primary motivation for not providing information is the protection of commer

cial confidentiality and perceived security interests in the recipient countries.

Company annual reports, including financial statistics according to national

accounting standards and a description of company activities, are an impor

tant tool for public transparency. Over the past 5–10 years, major private arms

producing companies worldwide have increased the amount of information

provided to the general public, through press releases and regular financial

reports, mostly published on their Web sites. Overall transparency has increased,

even though information relevant to questions of war and conflict and pre

sented in a format that allows for comparison continues to be scarce.

The increase in information provided is likely a response to the pressure of

key stakeholders in the companies, shareholders, and NGOs working on issues

related to arms production and the arms trade. It may also be a reflection of the

increased level of government transparency on arms transfers. The number

of governments publishing more comprehensive yearly arms export reports

to parliaments has multiplied over recent years. In response to the high level

of public attention on the issue, some of these reports contain information on

SALW exports. Reports available by mid2004 failed, however, to provide the

information in a standardized and therefore comparable format.3

Definition of terms

The Small Arms Survey uses the term ‘small arms and light weapons’ broadly to cover small

arms intended for both civilian and military use, as well as light weapons intended for

military use. When possible, it follows the definition used in the United Nations Report of

the Panel of Governmental Experts on Small Arms (UNGA, �997):

Small arms: revolvers and self-loading pistols, rifles and carbines, sub-machine guns,

assault rifles, and light machine guns.

Light weapons: heavy machine guns, hand-held under-barrel and mounted grenade

launchers, portable anti-aircraft guns, portable anti-tank guns, recoilless rifles, portable

launchers of anti-tank missile and rocket systems, portable launchers of anti-aircraft missile

systems, and mortars of calibres of less than �00 mm.

The Survey uses the term ‘firearm’ to mean civilian and military hand-held weapons that

expel a projectile from a barrel by the action of an explosive. Unless the context dictates

otherwise, the term ‘small arms’ is used in the Survey to refer to both small arms and light

weapons, whereas the term ‘light weapons’ refers specifically to this category of weapons.

� Small Arms Survey Occasional Paper 16 Reinhilde Weidacher Behind a Veil of Secrecy �

The small arms industry is even less transparent than the wider arms indus

try. This is likely to be at least partly a result of its ownership structure. Small

arms producing companies in Western Europe are not stock market listed

companies with a wide group of shareholders demanding information on

performance and activities. FN Herstal and its parent company Herstal, the

French GIAT Industries, the Greek Hellenic Defence Systems, and the Portu

guese Indep are government owned, while other small arms producing com

panies, such as Heckler & Koch, Beretta, Glock, Steyr Mannlicher, JP Sauer, and

Carl Walther, are owned by small groups of private investors. Few of these

companies make annual reports publicly available (see below).

Press coverage of company activities is generally limited. Some companies

are well known for their reluctance to provide even general information about

company performance and activities. A case in point is the Austrian company

Glock, owned by its founder, Gaston Glock, who is well known for his un

willingness to meet journalists.4 Very little information can be found in the

German and Italian press about Heckler & Koch and Beretta, or about minor

small arms producing companies. One of the largest military small arms pro

ducers in Western Europe, FN Herstal, was the only company that refused to

provide information for a study on Belgian arms producers carried out by the

University of Antwerp in 2002 (De Standaard, 2003).

Light weapons are generally produced by subsidiaries or facilities of compa

nies producing a wide range of land weapons, or of companies that are active

in diverse military sectors, such as the British company BAE Systems, the

Swedish Saab, the Swiss RUAG, or the French Thales. Annual reports of larger

arms producing companies with a diverse shareholder base are commonly pub

lished on company Web sites and are easily accessible to a wide public. They

do not, however, contain specific information on light weapons production.

Research methodologyFor the purpose of this study, a request for economic statistics and informa

tion about products was sent to more than 30 Western European companies

involved in the production of SALW.5 Only two companies responded to the

request—but declined to provide the information requested.

Information in this survey has therefore been derived primarily from pub

licly available financial documents, articles from mainly the local press in the

relevant countries, and the findings of national NGOs monitoring the activities

of arms producing companies.

None of the major small arms producing companies in Western Europe pro

vide copies of company annual reports on their Web sites. Such copies should

be obtainable, and in some cases actually can be obtained, from national banks,

chambers of commerce, or company registers of local authorities. However, it

was possible to obtain recent company reports for only two of the four major

small arms companies, Herstal (FN Herstal)6 and Beretta.7 The type of infor

mation provided is comparable to that made available by companies active in

other arms industry sectors. Details about the recipients of military and law

enforcement small arms are scarce.

Two among the major small arms producers in Western Europe, Heckler &

Koch and Glock, failed to file recent annual accounts and reports as required

by German and Austrian law.8 Despite repeated requests to the local authorities

responsible for compiling the copies of such reports, Heckler & Koch did not

file and thereby make publicly available its past annual accounts, nor did it

respond to the general questionnaire. The company did, however, provide

information on total sales, the export share of such sales, and the number of

its employees.

None of the land weapons producing companies for which small arms account

for a minor share of overall production provide detailed information about

their small armsrelated activities (GIAT Industries, General Dynamics Santa

Bárbara Sistemas, and Hellenic Defence Systems).

Some pieces of information are available for most companies, but these

refer to the type of products manufactured, overall sales, and the number of

total employees. Only in rare cases is information made available about the

breakdown of sales for different types of products, as well as for military and

civilian markets, respectively. A high level of secrecy is also maintained with

regard to ownership structures, in particular for SALW producing companies

not linked to the major arms producers in the aerospace, military electronics,

and land weapons industry. Examples in point are the German companies

Heckler & Koch and Dynamit Nobel Defence. Lack of clarity persists about

� Small Arms Survey Occasional Paper 16 Reinhilde Weidacher Behind a Veil of Secrecy 7

the owners of Heckler & Koch ever since the company was acquired by a

small group of private investors at the end of 2002. In 2004 Dynamit Nobel

Defence was established as an independent company. Both companies refused

to provide information about their owners for this survey.

Section � Overview

The Western European military aerospace and electronics industry has under

gone profound restructuring over the past 15 years. This has resulted in a

considerable level of concentration in ownership and the establishment of a large

number of industrial alliances across countries. To what extent overcapacity

has been eliminated in the process is difficult to assess, yet it is certain that

some consolidation has taken place. Restructuring and consolidation in the

land arms industry lagged behind other sectors, but has accelerated in recent

years not only within the military vehicles and largecalibre weapons sectors,

but also in the SALW segments.9

By mid2004, the most significant part of the Western European military small

arms industry was located outside the wider arms industry. Producers of light

weapons and ammunition, on the other hand, are integrated within the wider

arms industry. Industrial structure and ownership have important implica

tions for the possibilities for continued consolidation and the elimination of

overcapacity.

There are no comprehensive and reliable estimates about the overall size

(in terms of employment and output) of the European SALW industry. More

so, even data on the level of single countries and companies is poor and frag

mented. Companies producing SALW are part of the wider arms industry,

and in particular of the land arms industry. The core business of this industry

is, however, military vehicles and largecalibre weapons.

For these reasons, it is difficult to reach general conclusions on overall trends.

Available information leads, however, to the assessment that the industry is

significantly larger than required in order to satisfy strictly national or Euro

pean demands, resulting in a high level of dependency on exports outside

Europe.

The present section provides a summary of the characteristics of and trends

among Western European producers of small arms, light weapons, and ammu

nition.10 Table 4 presents available information on ownership and size. The

� Small Arms Survey Occasional Paper 16 Reinhilde Weidacher Behind a Veil of Secrecy 9

main part of the survey provides more comprehensive profiles by country

and major companies. The table in the appendix offers an additional and

detailed overview of the type of weapons produced by the major companies.

Small armsNo reliable and accurate information is available about the aggregate trend in

employment and output within the Western European military small arms

industry for the past 15 years. Data provided by companies, though scarce

and not comparable across either countries or companies, suggests that some

downsizing has occurred.

Employment decreased by more than 20 per cent within FN Herstal between

1991 and 2001, and fell by more than 50 per cent within Heckler & Koch and

the much smaller Steyr Mannlicher between 1990 and the late 1990s. The diver

sified Swiss company Schweizerische Industriegesellschaft (SIG) employed

around 950 people in Germany and Switzerland within its small arms division,

SIG Arms, in 1990. Employment in Switzerland was reduced in the late 1990s

in response to falling orders and cut drastically in 2000, when the division was

sold to private investors and broken up into separate companies. Trends in

sales are not equally conclusive. Total sales fell by more than 50 per cent in real

terms within FN Herstal and Steyr Mannlicher between 1991 and 2003, but

increased within Heckler & Koch.

By 2004, virtually all countries in Western Europe hosted companies produ

cing some military small arms or small arm parts. Only in half of the countries

included in this survey, however, were standard military small arms, such as

assault rifles, produced (see Table 1). A number of past producers of assault

rifles have left the market.

Past producers and exporters of standard military small arms that discon

tinued production in the late 1990s are: Kongsberg of Norway, RO Defence

(formerly Royal Ordnance) of the UK, Valmet/Sako of Finland, and SAN

Swiss Arms (formerly SIG Arms) of Switzerland. According to the limited

information available, the Portuguese company Indep, which in the past pro

duced Heckler & Koch rifles under licence for the Portuguese Army and for

export to African countries, has virtually discontinued production and is

likely to be closed down. The Swedish company Saab Bofors Dynamics, which

produced assault rifles for the Swedish Army up until the late 1990s, main

tains small arms production capabilities, although production was negligible

in 2004.

The Belgian company FN Herstal and the German Heckler & Koch dominate

the military small arms market within Western Europe and belong to the hand

ful of major suppliers worldwide. Combined sales and employment in military

and law enforcement small arms produced in Europe amounted to roughly

EUR 150–160 m. (USD 170–180 m.) and 1,400–1,500 workers, respectively, in

2003. Both companies are heavily dependent on sales to the US government.

Heckler & Koch announced the establishment of a manufacturing facility in

the United States in late 2003. Since the mid1980s, FN Herstal’s parent com

pany has had a USbased military small arms facility, FN Manufacturing Inc.

(FNMI).

After Heckler & Koch and FN Herstal, the most significant military small

arms producers are the Italian company Beretta and the Austrian Steyr

Mannlicher, as well as the small arms producing facilities of the French GIAT

Industries, the Spanish Santa Bárbara Sistemas, and the Greek Hellenic

Defence Systems. Information about the size of small arms production within

these companies is, with the exception of Beretta, insufficient. Beretta, FN

Table � Production of military small arms in Western Europe (2004)

No or negligible production

Special forces only Standard military small arms produced under licence

Standard military small arms developed and produced

Denmark Finland Greece Austria*

Netherlands Switzerland Spain Belgium

Norway UK Germany

Portugal Italy

Sweden France

* In �00�, Steyr Mannlicher announced that it would transfer all production and sales rights for military small arms

to Malaysia (see Steyr Mannlicher company profile, below).

�0 Small Arms Survey Occasional Paper 16 Reinhilde Weidacher Behind a Veil of Secrecy ��

Herstal, Heckler & Koch, the Austrian Glock, and the German companies Carl

Walther and JP Sauer are important producers of pistols for law enforcement

forces (see Appendix).

Dependency on sales to regions outside Europe and North America appeared

to be relatively low by 2004. Heckler & Koch exported 7 and 11 per cent of

total sales to countries outside Europe and the United States in 2003 and 2002,

respectively, compared to more than 20 per cent in the early 1990s. No com

parable data is available for FN Herstal. The drastic decline in total sales, by

more than 50 per cent, and available information about export contracts suggest

that sales to regions outside Europe and the United States decreased over the

past decade. Total sales of Herstal, FN Herstal’s parent company, within

Europe were as high as exports from European and US subsidiaries to countries

in other regions over the past three years. Around twothirds of total sales,

however, were made in the United States.

The decline in sales to countries outside Europe and North America is likely

a result of both the increased competition from nonEuropean producers and

the tightening of export controls in Western Europe in response to the signi

ficant increase in public attention to the devastating and longlasting effects

of uncontrolled flows of small arms to regions of conflict. It constitutes a signi

ficant change from the period between the early 1960s and the late 1980s, when

small arms produced in Western Europe, as well as licences and machinery

for their production, were exported to repressive regimes and governments

involved in armed conflicts almost without restrictions. The decision of the

Austrian company Steyr Mannlicher to move all production of militarystyle

small arms from its facility in Austria to a joint venture company in Malaysia,

announced in early 2004, stands in sharp contrast to the general trend (see

below).

Companies producing militarystyle small arms in Western Europe can be

roughly divided into two groups according to their structure and ownership:

firstly, companies that are exclusively producing small arms, and secondly,

small arms producing facilities within diversified land arms producers.

The German company Heckler & Koch, the Austrian companies Steyr Mann

licher and Glock, and the Italian Beretta specialize in the production of small

arms. All of these companies produce both militarystyle and civilian small

arms. Their dependency on sales to military and police varies from roughly

twothirds of total sales within Heckler & Koch to a mere 10 per cent within

Beretta. All four companies were owned by small groups of private investors

by mid2004.

Standard military small arms, often produced under licence from specialized

small arms companies, are or have been produced by the major Western Euro

pean land arms companies. Assault rifles are produced by the stateowned

French company GIAT Industries and the Greek Hellenic Defence Systems,

as well as by the Spanish Santa Bárbara Sistemas, a subsidiary of the large and

diversified US arms producer General Dynamics. Past production was carried

out within the British company Royal Ordnance (now RO Defence), the Nor

wegian Kongsberg, and the Portuguese Indep.

Modernization programmes

A large number of countries have initiated so-called soldier modernization programmes

aimed at integrating small arms with advanced electronic and optical equipment. The

majority of countries investing in such programmes on a large scale are industrialized

countries. Two developing countries, South Africa (African Warrior) and Israel have been

reported to have embarked on similar programmes.

Small arms producers play a minor role within soldier modernization programmes, as

military electronics companies assume the role of prime contractors and systems integrators.

Programme costs are significant, around EUR �00–�,�00 m. (USD 900–�,��0 m.) in the

major countries. Upgrades are likely to be carried out continually, offering significant

business opportunities to military electronics and optronics manufacturers. Deliveries of the

US Land Warrior system were initiated in �00�–0�. Only a few years after the last stage of

the current programme, a new system, Objective Force Warrior, is planned to enter into

service. Western European companies have assumed an important role in the programme.

Development of the platform for the system, the Objective Individual Combat Weapon

(OICW), started in the early �990s and it is planned to replace M�� rifles and M� carbines

by the end of the decade. An industry team led by Alliant Techsystems (ATK) won the roughly

USD �00 m. contract for the development (programme definition and risk reduction develop-

ment phase) of the OICW in �000 (ATK, �000). Besides ATK, the industry team includes

Heckler & Koch (weapon), Brashear LP (fire control), and Omega (training and logistics).

Table � provides an overview of some of the major ongoing programmes. Similar pro-

grammes are planned in Belgium (Belgium Soldier Technology), Denmark, the Netherlands,

Sweden (MARKUS—Markstridsutrustad Soldat), Australia (Land �� Soldier Combat System/

Wundurra), and Canada (Canadian Soldier Modernization).

�� Small Arms Survey Occasional Paper 16 Reinhilde Weidacher Behind a Veil of Secrecy ��

The Belgian company FN Herstal and the German Heckler & Koch were

owned by foreign land arms producers GIAT Industries and Royal Ordnance,

respectively, in the 1990s. Both faced severe financial problems at the time of

foreign acquisition. Also, before the mid1990s, the Austrian Steyr Mannlicher

was part of a larger diversified company, Steyr Daimler Puch, which was also

involved in the production of military vehicles and artillery systems.

Herstal is fully owned by the government of the Walloon region in Belgium,

which took full control of the company as a temporary measure in order to

prevent a foreign acquisition and the loss of local jobs—not unlike other gov

ernments’ interventions in the process of the restructuring of the European

arms industry after the end of the cold war. The company has been offered

for sale since mid2000. The Belgiumbased FN Herstal and the USbased

FNMI subsidiaries are fully dependent on military sales. The management of

Herstal has ruled out the possibility of these companies leaving the group.

Light weaponsLight weapons production is largely integrated within larger arms producing

companies. While more information is publicly accessible about these parent

companies than about a number of specialized small arms companies, little

information is made available about light weapons facilities and their activi

ties. It is therefore impossible to make even a rough estimate of the size of

employment and the value of sales related to the production of light weapons

in Western Europe.

Nine companies in the region are known to produce mortars.11 The same

number of companies produce portable antitank weapons,12 while only two

of them, the Swedish Saab and MBDA France, produce guided weapons.

Both companies also produce manportable air defence systems (MANPADS).

Antiaircraft missiles are produced by the German LFK, which is being inte

grated into MBDA, and Thales Air Defence Systems in the UK (see Table 3).

Mortars, rocket launchers, and grenade launchers are partly produced within

small and specialized companies such as the German Dynamit Nobel Defence

and the Spanish Instalaza. Very little information is available about these

companies. The majority of companies producing unguided light weapons

Table � Soldier modernization programmes, select countries

Country Programme Companies bidding for the contract*

Status/cost/small arms

France FELIN (Fantassin à Equipements et Liaisons Intégrées)

• SAGEM• Thales, GIAT Industries

Contractor selected in April �00� ��,000 systems for EUR �00 m. (USD 900 m.)Small arms: FAMAS, Minimi, FRF�

Germany IdZ Infanterist der Zukunft

• EADS Defence Electronics Projekthaus System Soldat including: Heckler & Koch, Thales Communications, Dräger, Zeiss Optronik, Schubert Helme, Mehler, and ESG• Alcatel, SEL/Thales

Initiated �997; �,�00 systems to be delivered in the period �00�–0�Small arms: G��, MP7, MG�, G��

Italy Soldato Futuro • Marconi Selenia Communication, Galileo Avionica, Larimart, Aero-Sekur, Sistema Compositi, Beretta

Initiated �00�; development �00�–0�; expected first deliveries �00�–07

Norway NORMANS (Norwegian Modular Arctic Network Soldier)

• Thales Communication R&D phase �00�; in service �0�0

UK FIST (Future Integrated Soldier Technology)

• Thales UK• BAE Systems

Assessment phase �00�–0�; in service �00�–��9,000 systems for GBP �00 m. (USD �,�00 m.)

USA Land Warrior • General Dynamics Decision Systems; the team includes General Dynamics Land Systems, General Dynamics C� Systems, Computer Sciences Corporation, Kaiser Electro-Optics, Omega Training Group, PEMSTAR, and Thales Communications

Block I: �00�–0�Block II: �007–0�Block III: �0�0–��Small arms: M��, M�

Objective Force Warrior

Procurement: �0��–��Small arms: (OICW) XM�9, XM�7

* Prime contractors are in bold type.


are, however, producers of a wider range of armaments, with light weapons

accounting for only a small share of their overall activities.

The Western European missile industry has undergone a process of profound

restructuring over the past decade, closely linked to the process of concentration

and European integration within the aircraft and military electronics industry.

Manportable missiles are manufactured by the subsidiaries of some of the

largest Western European aerospace companies that have led this process,

the joint venture European Aeronautic Defence and Space Co. (EADS) and

MBDA, the French Thales, and the Swedish Saab. These companies are closely

linked to each other through a complex shareholder structure and a long series

of coproduction programmes, including the French–German antitank weapon

programme Milan.

The largest European missile producer, MBDA, is controlled by three com

panies, BAE Systems with headquarters in the UK, the Italian Finmeccanica,

and EADS, which is registered in the Netherlands, with headquarters in France

and Germany.

EADS is the result of the merger of French, German, and Spanish aerospace

companies and is owned by the German DaimlerChrysler, the French state, the

French private company Lagardère, employees, and institutional investors.

BAE Systems also holds a significant share, 35 per cent, of Saab.

Ammunition No comprehensive data is provided by the industry about the value of sales

of ammunition for military SALW produced in Western Europe. While available

information suggests that the production of ammunition, in particular small

calibre ammunition, has been downsized considerably in recent years, it is

impossible to measure the decline.

The largest ammunition producer in Sweden, Norway, and Finland is the

joint venture Nordic Ammunition Company (Nammo), jointly owned by the

Norwegian government (45 per cent), Saab of Sweden (27.5 per cent), and Patria

of Finland (27.5 per cent). The Danish ammunition producer Ammunition

sarsenalet formed a production alliance with Nammo in 2004. Nammo employed

around 1,300 people in 2003.

A considerable share of small arms ammunition production in Western Europe,

for both civilian and military use, is carried out within RUAG Ammotec, with

manufacturing facilities in Germany, Switzerland, and Sweden. The company

absorbed the small arms ammunition activities of the Austrian company Hirten

berger and the German Dynamit Nobel. RUAG Ammotec employed close to

1,300 people in 2003. Its parent company, RUAG, is also a significant producer

of ammunition for light weapons. In 2004, the company announced its plan to

streamline ammunition production in response to falling orders.

Other Western European ammunition producers have carried out or initiated

restructuring plans in response to low orders from domestic and foreign armed

forces. Small arms ammunition production has been restructured in recent

years within the Italian company Europa Metalli and has been discontinued

in the Netherlands. The Spanish company EXPAL announced employment cuts

in 2004. The Portuguese stateowned land arms producer Indep, which faced

severe financial difficulties and drastic employment cuts throughout the 1990s,

is likely to be closed down. Insufficient information is available about stream

lining efforts within the recently established Greek land arms company

Hellenic Defence Systems. The company has sold its small arms ammunition

manufacturing machinery to the Spanish company Santa Bárbara Sistemas.

Differently from the above companies, Santa Bárbara Sistemas is expanding

and is currently participating in an industrial team competing for a US small

arms ammunition contract.

Table � Companies producing man-portable missiles

Country Company Weapons

France MBDA anti-aircraft (Mistral); anti-armour (Milan; Eryx)

Germany LFK anti-aircraft (Stinger)*

Rheinmetall/Diehl anti-armour (Spike)**

Sweden Saab Bofors Weapon Systems anti-aircraft (RBS70); anti-armour (BILL)

UK Thales Air Defence Systems anti-aircraft (Starstreak)

* Produced under licence from the US company Raytheon.

** Produced under licence from the Israeli company Rafael.

�� Small Arms Survey Occasional Paper 16 Reinhilde Weidacher Behind a Veil of Secrecy �7

Industrial consolidation across European countries in the field of ammunition

propellants and high explosives has been initiated through the establishment

of a joint venture in January 2004 that includes five subsidiaries of three com

panies, namely two French facilities of SNPE Matériaux Energétiques, the

Belgian PB Clermont, the Finnish Nexplo Vihtavouri, and the Swedish Nexplo

Bofors. Eurenco (European Energetics Corporation) is owned 60 per cent by

Groupe SNPE and 20 per cent each by Patria and Saab. The company employed

850 people in 2004.

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Section � Country profiles

Country profiles include, as applicable:

• a brief introduction on the size and the structure of the overall arms

industry;

• an overview of production of militarystyle small arms;

• an overview of production of small arms ammunition;

• an overview of production of small arms ammunition manufacturing

equipment;

• an overview of production of light weapons; and

• an overview of production of sighting equipment for infantry weapons.

AustriaAustria is a minor producer of military equipment. Overall, around 2,000 people

were employed in arms production in 2002, generating revenues of EUR 187 m.

(USD 175 m.), according to estimates published by the national chamber of

commerce (Wirtschaftskammer Österreich, 2003). Data provided by the Austrian

industry association in the late 1990s indicates that employment in arms pro

duction has been halved during the past decade.13

The Austrian arms industry was heavily dependent on arms exports through

out the 1980s and 1990s because of the limited requirements of the domestic

armed forces. A major arms export scandal in the second half of the 1980s,

involving a stateowned arms producing company (Noricum) selling arms

illegally to both sides in the Iran–Iraq war, led to a major shakeup of the arms

industry and initiated the withdrawal of the state from direct ownership.

In spite of the small size of its overall arms industry, Austria is a significant

designer of military rifles and an important producer of pistols for law enforce

ment and civilian markets. A large number of minor companies produce

hunting and sporting rifles.14

Small armsSteyr Mannlicher is a minor manufacturer of military rifles, but continues to

develop new versions of its AUG (Army Universal Gun) assault rifle. The

company faced severe financial problems throughout the 1990s and was

transformed from a stateowned into a private company. In order to evade

the more restrictive Austrian arms export law, the company announced that

it would move production of militarystyle firearms to Malaysia. The pistol

producer Glock, on the other hand, according to the few pieces of information

that are made available, has a firm production base in Austria. International

sales, accounting for a major share of the company’s total sales, are, however,

administered by a foreignbased company. Detailed company profiles for Steyr

Mannlicher and Glock are provided below.

Light weaponsTwo Austrian companies are involved in the production of light weapons.

Hirtenberger Defence Systems produces mortars and mortar, artillery, and

tank ammunition (Hirtenberger Defence Systems, n.d.). In 2003, the company

discontinued its smallcalibre ammunition production (90 employees) in response

to the strong competition from East European producers and sold the Hirten

berger small arms ammunition brand and sales rights to the Swiss company

RUAG Ammotec (Ober österreichische Nachrichten, 2003b). In 2001, Hirten

berger established a small arms ammunition joint venture in Hungary (Euregio

forum, 2001).

Hirtenberger Defence Systems is part of the private Hirtenberger Group,

formerly a specialized military company that diversified its product range and

entered the civilian market in the early 1990s. The group had total sales of

roughly EUR 72 m. (USD 81 m.) in 2003, and employed more than 520 people

(Hirtenberger Group, n.d.).

Arges/Ulbricht’s produces hand grenades and high explosives. No recent

information is available about either the size of the company or its owners.

In the past, Dynamit Nobel Graz and its subsidiary, Dynamit Nobel Wien,

produced military explosives, including antipersonnel mines. The latter employed

156 people when the company went into bankruptcy in 2002 (Ober österreichische

Nachrichten, 2003a). It was acquired by the US explosives company Austin


Powder (part of the Davis Mining & Manufacturing group) in 2003 and re

named Austin Powder (Die Wirtschaft, n.d.). No relevant information is available

about the company (Austin Powder, n.d.).

SightsPhotonic Optische Geräte (Photonic Optics) produces sights for assault rifles,

sniper rifles, and mortars (Phototonic Optics, n.d.). Swarovski Optik produces

sights for small and largecalibre weapons.

COMPANY PROFILE STEYR MANNLICHER

Steyr Mannlicher is a small company. Total sales amounted to EUR 16 m. (USD

18 m.) in 2003 and the number of employees was 120. No recent information is

available about the share of military versus civilian sales (military sales accounted

for around half of total company sales in the early 1990s).

Steyr Mannlicher’s most significant military product is the AUG assault rifle,

produced since 1978 and sold to the armed forces of a large number of coun

tries, including Austria, Australia, Ireland, and New Zealand, but also to more

controversial destinations such as Bolivia, Malaysia, Oman, Saudi Arabia, and

Venezuela.

In addition to assault rifles, Steyr Mannlicher produces sniper rifles, anti

matérial rifles, and pistols (see Appendix). The company also produces hunting

rifles. It left the market for sporting arms in 2002 when it sold its 51 per cent

share in the German producer of sport rifles, Suhler, as well as its sport arms

activities, Steyr Sportwaffen GmbH.

Steyr Mannlicher faced severe financial problems throughout the 1990s.

Total sales declined by 50 per cent between 1991 and 1996, while employment

was reduced from 260 to 180 during the same period. This was the direct result

of a significant decline in the production of assault rifles since the late 1980s,

as the company made its last delivery of AUG assault rifles to the Austrian

armed forces in 1987. The attempt to gain new markets through the develop

ment of a submachine gun, the Tactical Machine Pistol (TMP), failed (Ober öster-

reichische Nachrichten, 1993; 1995). The production rights for the TMP were

sold to the small Swiss company Brügger & Thomet.

Steyr Mannlicher failed to win significant contract awards within Europe.

The most important export contracts for the company were the licences for

the production of AUG rifles to Australia (1988) and Malaysia (1991). More

than 110,000 AUG rifles were produced in Malaysia in the period 1991–2003.

According to Steyr Mannlicher, the production of components for rifles that

were produced under licence abroad accounted for about half of the company’s

military sales in the early 1990s (Ober österreichische Nachrichten, 1991).

In March 2004, Steyr Mannlicher took its cooperation with Malaysia several

steps further by announcing its plan to transfer the licence for the production

and sale of all military small arms to Malaysia (David & Andres, 2004), a step

taken with the clear purpose of evading Austrian arms export controls.

Wolfgang Führlinger, the owner and manager of the company, declared: ‘We

will no longer produce military equipment in this country. As a business man

I am tired of being considered at a par with drugdealers and pimps.’15 Steyr

Table � Available financial and employment data: Steyr Mannlicher*

2003 2002 2001 2000// 1996 1995 1994 1993 1992 1991

Total sales �� 0 .. �7 �7 �� 9 ��

Civilian % .. .. .. .. .. .. .. .. .. ..

Military % .. .. .. .. .. .. 50 .. .. ..

Police % .. .. .. .. .. .. .. .. .. ..

Total domestic sales %

.. .. .. .. .. .. .. .. .. ..

Total foreign sales %

.. .. .. .. .. .. .. .. .. ..

Profit (net) .. .. .. .. -� .. .. .. .. ..

Total employees

��0 .. �� .. �7� �� 97 �0� �� 0

Sources: Mitte �00� Absiedlung nach Niederösterreich, Textarchiv Oberösterreichische Nachrichten (http://www.

nachrichten.at/archiv), �� Jan. �00�; Holzer (�00�); Miserable Auftragslage, �� Arbeitsplätse wackeln, Textarchiv

Oberösterreichische Nachrichten (http://www.nachrichten.at/archiv), �9 July �00�; Mannlicher baut Mitarbeiter ab,

Textarchiv Oberösterreichische Nachrichten (http://www.nachrichten.at/archiv), �� Dec. �99�; Velusttochter inhaliert,

Textarchiv Oberösterreichische Nachrichten (http://www.nachrichten.at/archiv), �� Aug. �997; Grosse Schreckpistole

für US Hausfrauen, Textarchiv Oberösterreichische Nachrichten (http://www.nachrichten.at/archiv), �� Dec. �99�;

Steyr Daimler Puch (�99�–9�)


Mannlicher announced the creation of a joint venture company with National

Aerospace and Defence Industries (NADI), Steyr Mannlicher Sdn Bhd, mainly

for the production of an upgraded assault rifle, the AUG A3. The new com

pany plans to produce more than 15,000 rifles per year for customers in the

Middle East and Asia (Defense Aerospace, 2004).

In late 2004, Steyr Mannlicher received a contract from the Iranian govern

ment for the delivery of 800 HS.50 heavy sniper rifles. This deal, authorized

by the Austrian government, is highly controversial because of wellfounded

fears that the rifles might be used for violations of human rights in Iran or

that some of them might be diverted to Iranian nonstate allies, such as

Hezbollah or certain militant groups in Iraq (Möchel, 2005).

COMPANY PROFILE GLOCK

Very little information is available about Glock, one of the largest Western

European producers of pistols for both civilian and police markets. Company

management refuses to disclose even basic information to the public.16

According to the sparse information available, total company sales are estimated

at roughly USD 100 m., with an overwhelming share derived from foreign

sales. Glock employed about 450 people in 2002–03 (see Table 6).

Glock has three manufacturing facilities, two in Austria (DeutschWagram

near Vienna and Ferlach) and one in the United States (Smyrna, Georgia). The

company has sales offices in Asia (Hong Kong) and Latin America (Uruguay).

No formal links exist between Glock GmbH and its foreign activities, which

are administered by the Luxemburgbased company Unipatent (Maierbrugger,

2004).

Glock has produced pistols since the early 1980s, when it won the contract

for the supply of Glock 17 pistols to the Austrian Army. Outside Austria, Glock

pistols are in service with a large number of European armed forces, as well

as with US federal agencies. They have also been sold to the armed forces of

India, Jordan, Philippines, Taiwan, and Thailand (Jane’s Information Group,

2004a, pp. 863–76).

In 2003, Glock was awarded a US contract for the delivery of up to 100,000

pistols for Iraqi police officers. Pistol parts will be produced in Austria and

assembled in the United States (Die Presse, 2003). Glock pistols for the American

market are assembled at the Glock US facility in Smyrna, Georgia. The awarding

of the contract to a European small arms producer caused protests from US

competitors (Svitak & Sia, 2003).

Glock is majority owned and managed by its founder, Gaston Glock. Glock

GmbH is 80 per cent owned by Glock Privatstiftung, a foundation created in

1999. Gaston Glock’s children participate in the management of the company.

Company history

1987 Small arms production is spun off from Steyr Daimler Puch AG (owned by the state-owned Creditanstalt Aktiv) and set up as an independent subsidiary, Steyr Mannlicher

1996 The South Korean company Daewoo tries to acquire Steyr Mannlicher’s parent company, Steyr Daimler Puch; Daewoo’s offer is rejected

1996 Steyr Daimler Puch is acquired by Magna; Steyr Mannlicher is excluded from the deal and remains, together with Steyr Spezialfahrzeuge, in the hands of Creditanstalt Aktiv

2001 The German company Umarex, owner of Carl Walther, tries to acquire Steyr Mannlicher; the offer is rejected

2001 Cura Investmentholding—owned by Wolfgang Führlinger—acquires Steyr Mannlicher

2002 Cura Investmentholding is renamed Steyr Mannlicher Holding GmbH, with Steyr Mannlicher GmbH & Co. KG as a fully owned subsidiary

2004 Steyr Mannlicher announces the establishment of a joint venture company in Malaysia

Table � Available financial and employment data: Glock*

2002–03 2000

Total sales ca. USD �00 ..

Civilian % .. (50)

Military/police % .. (50)

Profit (net) .. ..

Total domestic sales % .. ca. 15

Total foreign sales % ca. 66 in USA ca. 85

Total employees ��0 in Austria ��0, of which ��0 in USA

Sources: Format (�00�); Die Presse (�00�); Christi (�000)


While extraordinarily little information is openly disclosed, Glock—the com

pany as well as its owner—frequently appears in the headlines of the Austrian

press. In 1999, Gaston Glock was the victim of a murder attempt by his business

partner, Charles Ewert, employed by Glock 15 years earlier to set up a company

managing Glock’s international business (Machan, 2003). The company, Uni

patent Holding, is based in Luxemburg. Lack of clarity persists about its

ownership. Also, Gaston Glock’s close links to Jörg Haider, the former leader

of the rightwing Austrian Freedom Party, have attracted public attention

(Profil, 2000; Maierbrugger, 2004).

BelgiumAccording to the Belgian arms industry association, Belgian Defence & Security

Group (BDIG),17 total arms industry revenues in Belgium amounted to EUR

600 m. (USD 560 m.) in 2001–02 (Albers, 2002; Delmartino, 2002). The produc

tion of SALW, their parts, and ammunition accounted for a major part of this

figure. Because of the limited requirements of the domestic armed forces, the

Belgian arms industry is heavily dependent on exports, which accounted for

around 80 per cent of total sales, according to available estimates (Jane’s Infor

mation Group, 2000).

According to official statistics, the value of arms exports amounted to close to

EUR 300 m. (USD 280 m.) in 2002 (excluding a wide range of military products,

in particular military electronics).18 The value of exports of large, medium,

and smallcalibre ammunition and SALW amounted to around EUR 160 m.

(USD 150 m.), of which about half was for weapons and parts and half for

ammunition. The value of exports has decreased by more than 60 per cent in

real terms since 1991.19

Small armsBelgium is the home of one of the world’s largest military small arms producers,

FN Herstal. The company is a subsidiary of Herstal Group, which, besides

FN Herstal, includes the US military small arms producing subsidiary FNMI.

Revenues from military small arms produced in the United States accounted

for more than onethird of Herstal’s total military and law enforcement sales

in 2003. About twothirds of the group’s revenues are derived from the sale

of civilian small arms—a significant part of which are produced in the United

States. Close to half of the people employed in civilian production were located

in the United States in 2003. A detailed company profile is provided below.

AmmunitionA small Belgian company, New Lachaussée, produces machines for the pro

duction of small arms ammunition (New Lachaussée. n.d.a). Its activities are

closely linked to FN Herstal, which, together with the now defunct explosives

company PRB (Poudrières Réunies de Belgique), participated in the estab

lishment of New Lachaussée in 1992. The company had sales of EUR 12.5 m.

(USD 14 m.) in 2003, of which 95 per cent were derived from exports, and

employed 60 people (New Lachaussée. n.d.b).

Small arms ammunition manufacturing equipment has in the past been sold

to China (ammunition for sport shooting is produced by the Chinese company

Norinco, according to official information), Iran (hunting ammunition, accord

ing to official information) (Gazet van Antwerpen, 2001), and Kenya (Eldoret

Ordinance Bullet Factory, established in the first half of the 1990s) (Amnesty

International Vlaanderen, n.d.). New Lachaussée is part of a consortium led

by the German company Fritz Werner (now MAN Ferrostaal Industrieanlagen)

that won a contract to build a military small arms ammunition plant in Turkey

in 2000. Company information suggests that, in addition to the abovementioned

destinations, equipment at some time has also been delivered to countries such

as Ethiopia, Cameroon, and Colombia.20

Company history

1963 Creation of Glock (Vienna): production of plastic and steel components

1983 Glock wins the competition for the production of ��,000 pistols for the Austrian Army

1985 Establishment of a manufacturing subsidiary, Glock Inc., in Georgia, USA

1988 Establishment of a Glock sales office in Hong Kong

1988 Establishment of a second manufacturing facility in Austria (Ferlach, Kärnten)

1990 Establishment of a Glock sales office in Montevideo, Uruguay


In early 2004, the Belgian export credit agency announced that it would author

ize a contract with New Lachaussée for the export of small arms ammunition

manufacturing equipment to Tanzania. After protests from NGOs, an export

authorization was denied (IPS, 2004).21 In mid2004, the Belgian NGO Forum

voor Vredesactie reported that New Lachaussée was seeking an authorization

for the export of small arms ammunition manufacturing equipment to Nepal

(which, since 2002, has acquired FN Herstalmanufactured Minimi light machine

guns and FNMImanufactured M16 rifles) (Forum voor Vredesactie, 2004).

New Lachaussée is part of the Forrest Group, owned by Georges Forrest,

and in 2002 was accused by a UN expert panel of having participated in the

illegal exploitation of natural resources in the Democratic Republic of the Congo

(DRC) (UNSC, 2002).

Light weaponsTwo Belgian companies are producing light weapons in addition to FN Herstal.

Mecar produces largecalibre ammunition for tanks and mortars, as well as

grenades (rifle and hand grenades) (Mecar, n.d.). The company employed 320

people at the end of 2003 and had revenues of USD 130 m. (with revenues of

USD 95 m. and USD 77 m. in 2002 and 2001, respectively).22 Mecar is owned by

the US company Allied Defense Group, which, at the end of 2003, announced

the formation of a USbased subsidiary, MECAR (Allied Defense Group, 2003).

PB Clermont is a Belgian ammunition propellant manufacturer (PB Clermont,

n.d.). The company is part of the French Groupe SNPE and as such became a

subsidiary of the European explosives and propellant company Eurenco, estab

lished in January 2004. Eurenco is 60 per cent owned by Groupe SNPE and 20

per cent each by Patria of Finland and Saab of Sweden (PB Clermont, 2004).

PB Clermont employed 125 people in mid2004.

SightsOIP Sensor Systems (formerly the Belgian division of Delft Sensor Systems)

developed the IRBIS weapon sight for the Belgian armed forces (OIP, 2000).

Around 80 per cent of the company’s sales were militaryrelated in 2001

(Delmartino, 2002). The company has experienced severe financial difficulties

in recent years and employed 50 people in mid2003, when it was sold by its

Dutch parent company, Delft Instruments, to the private Israeli military elec

tronics company Elbit Systems (Delft Instruments, 2003).

Aims Optronics produces small arms laser sights.

COMPANY PROFILE HERSTAL AND FN HERSTAL

The Belgian Herstal Group is by far the largest small arms producing company

and the largest military small arms producing company in Western Europe.

The company had total sales of roughly EUR 400 m. (USD 450 m.) in 2003, of

which EUR 150 m. (USD 170 m.) was derived from military and law enforce

ment sales. Herstal employed more than 2,500 people in 2003.

Company sales declined significantly during the 1990s, by roughly 25 per cent

between 1991 and 1999 in real terms, largely as a result of a sharp decline in

military and law enforcement sales. These accounted for close to 50 per cent of

company sales at the beginning of the decade, but had decreased to 29 per cent by

2000. Since that date, military and law enforcement sales increased and accounted

for 38 per cent of total sales in 2003. Herstal is currently streamlining its civilian

activities, which made a loss of roughly EUR 15 m. (USD 17 m.) in 2001.

Herstal manufacturing subsidiaries are located in Belgium, the United

States, Portugal, Italy, and Japan.23 The group’s largest subsidiary, FN Herstal,

accounted for a quarter of the group’s total sales and more than a third of its

employees in 2003. FN Herstal is 100 per cent dependent on military and law

enforcement sales. The subsidiary has a sales office in Singapore. The group’s

US subsidiaries, the military small arms company FNMI and the civilian small

arms producer Browning (which FN Herstal acquired in 1976), employed

roughly 43 per cent of the group’s total workforce in 2003.

Herstal Group companies produce a wide range of military, law enforce

ment, and civilian small arms, as well as light weapons. FN Herstal produces

assault rifles (F2000, FNC, and FAL), machine guns (Minimi, MAG, and M2HB

QCB), submachine guns (P90), pistols (FiveseveN and a number of earlier

models), and small arms ammunition. The company also produces machine

gun mounts for helicopters, military vehicles, and ships, as well as rocket

launchers. About 78 and 16 per cent of FN Herstal sales were derived from the

sale of small arms/light weapons and ammunition, respectively, in 2002.


Table 7 Available financial and employment data: Herstal Group and FN Herstal*

Herstal Group 2003 2002 2001 // 1999 // 1997 // 1995 // 1993 // 1991

Total sales �0� ��9 �� 7� �99 �97 ��

Military/police sales �� 7 �� 9� �90 ��9

Military/police % 38 36 32 29 33 39 49 48

Profit (net) � � -� -� -�0 -�� -��

Civilian profit � � -�� profit .. .. .. ..

Military/police profit � � 9 loss .. .. .. ..

Total domestic sales %

1 2 1 .. .. .. .. ..


99 98 99 .. .. .. .. ..

Sales to Europe % 18 14 16 .. .. .. .. ..

Sales to USA and Canada %

67 68 68 .. .. .. .. ..

Sales to other regions %

14 18 16 .. .. .. .. ..

Total employees �,�� ,�� ,�7� �,7�� ,��9 �,77� �,770 �,9��

Employees USA �,079 90� �,0�� .. .. .. .. ..

FN Herstal 2003 2002 2001 // 1999 // 1997 // 1995 // 1993 // 1991

Total sales 97 ��7 �0� 9� �0� �7� �� 7

Profit (net) 9 � � -� -�9 -� �0 -�

Domestic sales % 1 4 2 .. .. .. .. ..

Foreign sales % 99 96 98 .. .. .. .. ..

Total employees 9�� 9�� 90� 9�0 �,�0� �,0�7 �,0�� ,��

* Financial data is in EUR millions at constant �00� prices.

Sources: �000 through �00�: Herstal (�00�; �00�); �99� through �999: Mampaey (�000)

The USbased military subsidiary of Herstal was established in 1981 when

FN won a contract to manufacture M16 rifles for the US armed forces. FNMI

produces these M16s (M16s were developed and in the past produced by the

US small arms company Colt) and M240 machine guns, M249 SAWs, and the

FNP Polymer 49 pistol for military and law enforcement forces. The primarily

civilian arms producing company Browning produces pistols and small arms

ammunition for law enforcement authorities. FN Herstal and FNMI also market

the sniper rifles of the French company PGM Precisión.

FAL assault rifles are in service with the armed forces of a very large number

of countries worldwide and are or have been produced under licence in Argen

tina, Brazil, Canada, India, Mexico, South Africa, the UK, the United States,

and Venezuela. FNC light assault rifles are produced under licence in Indo

nesia and Sweden (Jane’s Information Group, 2004a). FN Herstal introduced

a new assault rifle, the F2000, in 2001.

FN Herstal’s Personal Defence Weapon (PDW), the P90 submachine gun,

was developed in the 1980s and is in service with police forces in Europe, as

well as with Saudi Arabia’s Special Forces, and the armed forces of Cyprus

and Peru (Jane’s Information Group, 2004a).24 The export of 500 submachine

guns to Mexico was halted in 2000 in response to public protest and the failure

of the company to provide an enduser certificate.25 The P90 is currently com

peting with the Heckler & Koch MP7 for the contract for supplying the North

Atlantic Treaty Organization (NATO) small arms requirement for close combat.

The sale of FN Herstal military small arms, directly and under licence, is

supported through the supply of technical assistance provided by FN

Herstal’s Military Engineering division. FN Herstal has also close links to New

Lachaussée, which produces machinery for the production of small arms ammu

nition (see above).

Close to 100 per cent of Herstal Group sales are derived from sales outside

Belgium, a large share of which, in the military and law enforcement sectors, is

through exports from Belgium. North America accounted for the overwhelming

share of foreign sales, more than twothirds in 2003.

FN Herstal provides no information about regional shares of total exports.

Requests for government authorizations for exports of militarystyle weapons

to destinations outside Western Europe and the United States have caused

intense political debate in Belgium in recent years, within the framework of a

wider controversy about arms export between the region of Flanders and the

heavily arms industrydependent region of Wallonia (Delmartino, 2000b).

The most recent debate arose in 2002, when FN Herstal received an authori

zation to export 5,500 Minimi machine guns to Nepal. Despite strong public


opposition to the deal, it supplied the first machine guns in December 2002

(Merckx, 2003). Partly in response to the clash of positions over Nepal, the

responsibility for granting export licences was transferred to the regions in

2003.

In the period 1991–97, the French land weapons company GIAT Industries

owned a majority share (92 per cent) of the Herstal Group. While the Walloon

regional government held a mere 8 per cent of the capital of Herstal, it neverthe

less maintained a veto right. GIAT Industries, facing severe financial difficulties

of its own, was unable to address the difficulties of its new subsidiary. While

civilian sales accounted for more than 50 per cent of Herstal sales at the time

of the acquisition, GIAT Industries was fully dependent on military sales.

When GIAT Industries tried to sell Herstal to the US small arms company Colt

in 1997, the Walloon regional government intervened and acquired 100 per cent

of the shares of the company. Herstal Group is managed through the public com

pany SOGEPA (Société Wallonne de Gestion & de Participation) (Decroly, n.d.).

Following its acquisition of the company, the regional government launched

a restructuring plan, ‘Plan Herstal 2000’, and invested around EUR 75 m. (USD

70 m.) in the company in the period 1997–2001 (RTBF, 2001). From the start,

regional government ownership was planned to be temporary—a means to

help the company become profitable (RTBF, 2001). In June 2000, the regional

government announced that Herstal Group was for sale under three condi

tions: it must not be split up; the centre of research and development had to

remain in Belgium; and existing levels of employment in Liege had to be

maintained (Delmartino, 2000a). Herstal’s dependency on the United States in

the field of research and development (R&D) (since 2002, FN Herstal has been

involved in ‘smart gun’ research funded by the US Department of Justice)

feeds into fears of a US takeover.27

DenmarkDanish production of small arms and parts is negligible. Ammunition for

SALW is produced within the statecontrolled Ammunitionsarsenalet, which

is an independent organization within the Danish Army Matériel Commando

(Danish Army Matériel Commando, n.d.). In June 2004, Ammunitionsarsenalet

formed an alliance with Nammo for the production of military small arms

ammunition (Nammo, 2004).28 A minor company, Small Arms Industries (SAI)

produces silencers and shotguns (Finland, 2002).

FinlandFinland is a minor producer of small arms for military and law enforcement

authorities, but has some production of ammunition for SALW within what

is by far its largest arms producing company, Patria (formerly Patria Industries).

Company history��

1889 Formation of FN (Fabrique Nationale), to produce Mauser rifles under German licence for the Belgian Army

1896 FN starts producing bicycles

1900 onwards FN starts producing vehicles, including military vehicles

1914–18 Manufacturing activities are discontinued

1936 FN obtains a licence for Bofors anti-aircraft guns

1940–94 FN is controlled by the German Deutsche Waffen und Munitionsfabriken

1948 FN starts producing aircraft engines

1953 FN obtains a licence for Bofors anti-aircraft guns

1976 FN acquires Browning

Mid-1980s FN Herstal starts development of the P90 sub-machine gun

1988 FN acquires the brand and sales rights for Winchester

1991 Formation of Herstal Group

1991 Société Générale de Belgique sells 9� per cent of Herstal Group to GIAT Industries. Non-small arms activities are divested

1997 The Walloon regional government acquires 9� per cent of Herstal Group from Giat Industries and becomes the �00 per cent owner

2000 The Walloon regional government announces that Herstal Group is for sale

2001 FN Herstal introduces the F�000 assault rifle

2002 FN Herstal is granted an export licence for Minimi sub-machine guns to Nepal


The Finnish government arms export report provides detailed information

about SALW exports. According to the report for 2002, the value of small arms

exports amounted to around EUR 1 m. (USD 0.9 m.), and the value of exports

of small arms ammunition and of guns and mortars amounted to roughly

EUR 4.3 m. (USD 4 m.) each (Finland. Ministry of Defence, 2002).

Small armsThe Finnish company Sako produces specialized military and law enforcement

rifles, the TRG sniper rifle, and hunting rifles (Sako, n.d.). In the past, Sako was

involved in the production of Valmet assault rifles for the Finnish Army. Valmet

merged with Sako in 1987. After the production of a small batch of M95 rifles,

Sako seems to have discontinued all production of assault rifles (Jane’s Informa

tion Group, 2004a). In early 2000, Sako was sold by its former parent company,

Metso Corporation, to the Italian company Beretta (Metso, 1999). Sako includes

the small arms company Tikka and the Canadian company Stoeger. Sako em

ployed 234 people in 2002 and had total sales of around EUR 23 m. (USD 22 m.),

primarily from sales of civilian small arms.

Noptel produces training systems for small arms (Noptel, n.d.).

Ammunition and light weaponsThree Finnish companies, either part of or linked to Patria, are producers of

small and mediumcalibre ammunition and light weapons. These are Patria

Weapon Systems and two Patria companies that have been integrated within

European joint ventures, Nammo Lapua and Eurenco Vihtavuori.

Patria was established in 1997 as a stateowned weapons manufacturer

through a merger of the Finish arms producing companies operating within

different sectors, with the exclusion of shipbuilding. In 2001, EADS acquired a

minority share in the company. Patria had military sales of roughly EUR 200 m.

(USD 225 m.) in 2003, which accounted for 75 per cent of total company sales.

Around 37 per cent of total sales were derived from exports.

Patria Weapon Systems manufactures mortars (originally developed by

Tampella, later Vammas) and artillery systems. The company had sales of

roughly EUR 30 m. (USD 34 m.) in 2003, or slightly more than 10 per cent of

total Patria sales, and employed 224 people (Patria, 2004).

Nammo Lapua (formerly Lapua) produces primarily small arms ammuni

tion for hunters, sport shooters, and law enforcement authorities, as well as

artillery and mortar ammunition. The company, including its German sub

sidiary SK Jagd und Sportmunitions, employed about 350 people in 2003

(Nammo, n.d.). Since 1998, it has been part of Nammo, jointly owned by the

Norwegian government (45 per cent), Saab of Sweden (27.5 per cent), and

Patria (27.5 per cent).29

Eurenco Vihtavuori (formerly Nexplo Vihtavuori Oy, the Finnish part of the

Finnish–Swedish joint venture Nexplo Industries) is part of the European explo

sives and propellant company Eurenco, established in January 2004.30 Eurenco

Vihtavuori produces propellants for medium and largecalibre ammunition,

mortar increments, and small arms ammunition, including for hunting and sport.

Oy Forcit produces explosives for military and civilian use. The company

had total sales of EUR 50 m. (USD 56 m.) in 2002 and employed 250 people

(Forcit, n.d.).

FranceThe French arms industry is the second largest in Europe. According to official

estimates, the value of arms sales in 2002 was roughly EUR 13.8 b. (USD 15.6 b.),

of which EUR 4.4 b. (USD 5 b.) were derived from exports.31 The French arms

industry was downsized significantly throughout the 1990s, but it is still un

clear whether this has resulted in a reduced dependency on arms exports.

The share of exports on total arms sales fluctuated throughout the 1990s and

averaged 37 per cent in the period 2000–02.

Significant overcapacity continues to exist, in particular in the land arms

sector, dominated by the stateowned GIAT Industries. This is the company

that traditionally produced standard military small arms, besides light weapons,

a wide range of ammunition, and, primarily, military vehicles.

Activities related to the development and manufacture of small arms within

the company were marginal by mid2004 and are likely to be further reduced

through measures related to the most recent restructuring programme, to be

carried out from 2004 to 2006 (see the company profile, below). Since 2004,

militarystyle small arms production in France has therefore been limited.


In the period 1997–2001, the value of French military small arms exports

amounted to just over EUR 1 m. (USD 0.9 m.), according to official data. The

value of light weapons exports during the same period amounted to more

than EUR 450 m. (USD 400 m.) (France, 2003, p. 68).

Small armsThe most significant producer of militarystyle small arms after GIAT Industries

is PGM Precisión, a company developing and manufacturing sniper rifles

and antimatériel rifles (Ultima Ratio, Hécate, MiniHécate, and Lapua Magnum).

PGM Precisión rifles are sold by Herstal subsidiary companies, i.e. the Belgian

FN Herstal and the US FNMI. No information is available about the owners

of PGM Precisión.

A private company, SAE (Société d’Armement et d’Études) Alsetex, pro

duces tactical shotguns, hand grenades, and antiriot ammunition. Since the

mid1990s, the company has been a subsidiary of Titanite (see below) (SAE

Alsetex, n.d.). SAE Alsetex had total sales of roughly EUR 11 m. (USD 12.5 m.)

in 2003, and employed about 80 people (Societe.com, n.d.a).

Chapuis Armes acquired the pistol manufacturing activities of Manurhin

Equipment (a producer of small arms ammunition manufacturing equip

ment; see below) in 1999. The company produces civilian and police revolvers,

as well as hunting rifles (Chapuis Armes, n.d.).

Ammunition manufacturing equipmentManurhin Equipment produces manufacturing equipment for small and

mediumcalibre ammunition (Manurhin Equipment, n.d.). The company was

sold in 1990 by its parent company, Matra, to the Belgian small arms company

Herstal. When Herstal was acquired by GIAT Industries in 1991, Manurhin

Equipment remained under Belgian control, but became independent in 1995.

In 1999, Manurhin Equipment sold its revolver manufacturing activities to

Chapuis Armes. In 2004, the company offered to take over GIAT Industries’

Cusset small arms ammunition manufacturing facility (Manurhin Défense)

(Ferrard, 2004).

Manurhin Equipment was a partner in the Germanled consortium that won

a contract to build a military ammunition plant in Turkey in 2000. Insufficient

information is available about past and current supplies of manufacturing

equipment for military ammunition.

Light weapons and ammunitionDetailed profiles for GIAT Industries and the European joint venture MBDA,

which produces manportable missiles, are provided below. TDA Armement

produces mortars and ammunition (TDA Armement, n.d.). The company is a

joint venture company of Thales and EADS Deutschland (formerly Daimler

Chrysler Aerospace), and was established in 1994. TDA Armement had total

sales of roughly EUR 80 m. (USD 90 m.) in 2003 and employed close to 500

people, down from close to 600 five years earlier, in 1998 (Societe.com, n.d.b).

Titanite produces small and mediumcalibre ammunition, as well as grenade

launchers and hand grenades. It also produces civilian explosives and had

total sales of around EUR 24 m. (USD 27 m.) in 2002, employing 150 people

(Societe.com, n.d.c). The company, formerly owned by Finexplo, was acquired

in 2000 by AXA Private Equity fund and was sold to the investment fund Fonds

Partenaires Gestion in September 2004 (Private Equity Week, n.d.).

Eurenco France produces ammunition propellants and high explosives.

The company is part of the European explosives and propellant company

Eurenco, established in January 2004 and majority owned by Groupe SNPE.32

OptronicsSAGEM’s Optronic and AirLand Systems division produces military small

arms sights. SAGEM acquired SFIM Industries, a producer of laser target

pointers and night sights scopes, in 1999,33 and the Swiss military optronics

company Leica Vectronix in 2003 (see below). SAGEM’s Optronic and AirLand

Systems division is part of the group’s Defence & Security branch with sales

of roughly EUR 1.1 b. (USD 1.2 b.) in 2003 (SAGEM, 2004a).

In early 2004, SAGEM won the contract for the French Army future infantry

soldier system FELIN (SAGEM, 2004b). FELIN consists of an integrated sighting,

fire control, and communication system to be fitted on the FAMAS assault rifle,

the Minimi light machine gun, and the FRF2 sniper rifle. The contract is for

around 32,000 systems at a value of close to EUR 800 m. (USD 900 m.). Deliveries

are expected to start in 2007 (Military Procurement International, 2004).


The military electronics company that lost the FELIN competition, Thales

(which teamed up with GIAT Industries for the FELIN contract), is involved in

similar military small arms network programmes in other European countries,

as well as outside Europe.

Thales, with headquarters in France, is one of the world’s largest military

electronics companies, with, for the arms industry, an extraordinarily large

number of foreignbased subsidiaries and joint ventures. Thales (formerly

ThomsonCSF) was partly privatized in 1998 (the French state held close to

onethird of the company’s shares by mid2004). The company had revenues of

more than EUR 10 b. (USD 11.3 b.) in 2003, more than twothirds from military

sales (Thales, 2004).

Within Europe, Thales’ production of optic, electrooptic, and electronic

infantry equipment is concentrated in Thales Optronic Systems, with facilities

in France, the Netherlands,34 and the UK.35 Thales UK is the prime contractor

for the Assessment Phase (initiated in 2003) of the British FIST (Future Inte

grated Soldier Technology) programme. The Demonstration and Manufacture

contract is expected to be awarded in 2006 (UK, 2003).

Outside Europe, Thales produces optic and electrooptic infantry equipment

in the 50 per centowned Australian company ADI and the South African com

pany ADS. Thales Optronic Systems, which produces military vehicles and air

and seabased equipment, employed 4,400 people worldwide in 2002 and had

total sales of more than EUR 600 m. (USD 560 m.) (Thales Optronic Systems,

n.d.).

COMPANY PROFILE GIAT INDUSTRIES

By 2004, GIAT (Groupement Industriel de l’Armement Terrestre) Industries

was one of the few fully stateowned arms producers in Western Europe. The

company is still one of the largest Western European land arms producers, but

will be subject to dramatic downsizing over the coming two to three years.

GIAT Industries was established in 1973 as a subsidiary unit of the Ministry

of Defence Direction Technique des Armements Terrestres (DTAT), and trans

formed into a company only in 1991. The company has experienced severe

financial difficulties due to overcapacity since its establishment—exacerbated

by the failures of the Leclerc tank programme initiated in 1982—and was sub

ject to reorganization programmes even before it transformed into a company.

Activities related to the development and manufacture of small arms within

GIAT Industries were marginal by mid2004 and are likely to be further reduced

through measures related to Projet GIAT 2006. This most recent restructuring

programme was first announced in early 2003 and will, if carried out fully,

reduce the workforce of GIAT Industries by more than half by 2006 (GIAT

Industries, 2003). According to Projet GIAT 2006, all capabilities related to SALW

development and production will be concentrated at one of the four facilities

that will make up GIAT Industries after 2006, i.e. the facility at Bourges. The

optical business at SaintEtienne is going to be sold off.

The traditional small arms manufacturing centre within GIAT Industries

was the SaintEtienne facility, Manufacture d’Armes de SaintEtienne (MAS),

which employed more than 3,000 people in the mid1970s. GIAT Industries’

most important infantry weapon is the FAMAS (Fusil Automatique, Manufacture

d’Armes de SaintEtienne) assault rifle originally produced at MAS. FAMAS

F1 production for the French armed forces started in 1979. The assault rifle

has been exported in small numbers to some countries such as Senegal and

the United Arab Emirates. The secondgeneration FAMAS G2 assault rifle is

one of the platforms for the French Army’s FELIN system. GIAT Industries

teamed up with the French private military electronics company Thales in the

competition for the contract for the FELIN system. The contract was awarded to

a competitor, the military electronics company SAGEM, in April 2004 (see above).

Since the late 1980s, the SaintEtienne facility has produced under Italian

licence the Beretta 92 semiautomatic pistol (French designation PAMAS—

Pistolet Automatique de la Manufacture d’Armes de SaintEtienne) for the

French Gendarmerie and Air Force (Hamel, n.d.). In 2003, however, GIAT

Industries lost the competition for the contract for around 250,000 pistols for

the French police and Gendarmerie, a contract worth around EUR 90 m. (USD

100 m.) (Morawski, 2003).

GIAT Industries produces only small arms for military and law enforcement

forces. However, in the period 1991–97, it owned a majority share (92 per cent)

of the Belgian small arms producer Herstal, including its significant civilian

small arms activities. The alliance was unsuccessful for both parties. The finan


cial loss for GIAT Industries from its ownership of Herstal has been estimated to

have amounted to EUR 300 m (France, 2002).36 Its temporary ownership of

Herstal made GIAT Industries also abandon its PDW programme, started in

the mid1980s, as Herstal’s military FN Herstal subsidiary developed a com

peting submachine gun (Paulson, 1998).

GIAT Industries’ Luchaire Défense and Manurhin Défense subsidiaries

produce a wide range of medium and largecalibre ammunition, including

grenades, and artillery and tank ammunition. Total ammunition sales, including

a minor share of smallcalibre ammunition, accounted for 11 per cent of GIAT

Industries’ total sales in 2003, or roughly EUR 80 m. (USD 90 m.) (GIAT Indus

tries, 2004, p. 5). Luchaire Défense and Manurhin Défense employed 261 and

385 people, respectively, in 2003 at manufacturing facilities in Cusset and La

Chapelle. According to Projet GIAT 2006, ammunition manufacturing will be

streamlined and concentrated at one facility, La Chapelle, which is planned to

employ around 270 people by 2006. GIAT Industries’ Tarbed facility will be

drastically downsized from 790 employees in 2003 to 150 by 2006, and will

focus on the production of pyrotechnic components (GIAT Industries, 2003).

COMPANY PROFILE MBDA

The European joint venture company MBDA produces manportable missiles.

The company has manufacturing facilities in France, Italy, and the UK and a

sales office in the United States. MBDA had total sales of around EUR 2 b. (USD

2.3 b.) in 2002, employing 10,000 people (MBDA, n.d.c). While no details are

available about the financial values of sales within different areas of activity

of the company, available information suggests that manportable missiles

account for a small part of total sales.37

MBDA was established in late 2001 through the merger of Matra BAe

Dynamics, EADSAerospatiale Matra Missiles, and the missile activities of

Alenia Marconi Systems, as the result of a consolidation process started in the

mid1990s when the French company Matra Défense and the British BAe

Dynamics merged into Matra BAe Dynamics. The largest German missile

producer, LFK (Lenkflugkörpersysteme), was 81 per cent owned by EADS

and 19 per cent by MBDA in mid2004, but is planned to be fully integrated

into MBDA in the near future. MBDA is owned 37.5 per cent each by BAE

Systems (UK) and EADS (Germany, France, Spain), and 25 per cent by Fin

meccanica (Italy).

MBDA produces the following manportable missiles: the Milan and Eryx

antitank missiles and the Mistral antiaircraft missile. A new antitank missile,

the Trigan, is under development as the proposed replacement for the Milan.

Besides manportable weapons, MBDA produces a very wide range of ground,

sea, and airlaunched missiles.

Milan missiles (Missile d’Infanterie Léger Antichar) are among the most

widely used antitank missiles worldwide. The Milan was developed in the

1970s by the Euromissile consortium owned by the French company Aerospatiale

and the German MBB, and are now produced by MBDA in cooperation with

LFK. Around 230,000 missiles have been jointly produced by the companies

since the 1970s. Another 100,000 missiles have been produced under licence

in Spain, India (Bharat Dynamics, since 1985), and the UK (MBDA, n.d.a). From

France and Germany, Milan missiles and missile launchers have been exported

not only to a number of other European countries, but also to a very large

number of countries in Africa and the Middle East, including Cameroon, Egypt,

Gabon, Kenya, Iraq, Lebanon, Mauritania, Morocco, Oman, Qatar, Somalia,

Syria, Tunisia, Turkey, and the United Arab Emirates (Jane’s Information Group,

2004a). Eryx antitank missiles have been produced by Aerospatiale Matra since

the early 1990s.

The Mistral antiaircraft missile was developed by the French companies

Matra, Aérospatiale, and TDA in the 1970s and entered series production in

the late 1980s. Mistral missiles have been sold to 25 countries, including eight

in Europe, eight in Pacific Asia, four in the Middle East, and five in South

America (MBDA, n.d.b).

GermanyNeither German arms industry associations nor government authorities are

forthcoming with relevant information about the size of the German arms

industry. A little information has been made available as an illustration of the

drastic downsizing of the industry since the end of the cold war. According


to this data, direct employment in the arms industry has dropped from around

280,000 to 50,000 since the end of the cold war.38

Germany continues to maintain a large land arms industry. Employment in

the sector has been estimated at around 6,000 people in 2003 (Erbe, 2004). German

production of land weapons is dominated by the military vehicle and military

electronics company Rheinmetall DeTec. Production of SALW is, however, largely

carried out outside this company by the two independent companies Heckler &

Koch and Dynamit Nobel Defence, as well as within the EADS subsidiary LFK.

The medium and largecalibre ammunition sector (Diehl and Rheinmetall)

is undergoing a process of restructuring in an effort to reduce existing over

capacity, while the production of small arms ammunition has been integrated

into the Swiss RUAG Group. Germany has a large industry producing small

arms for sport and hunting.39

The value of export authorizations (Einzelausfuhrgenehmigungen) for mili

tary small arms and their ammunition amounted to around EUR 61 m. (USD

57 m.) and EUR 15 m. (USD 14 m.), respectively, in 2002; of these totals, 74 per

cent and 47 per cent, respectively, went to European Union (EU) member

countries.40 Small arms export authorizations to the United Arab Emirates,

Saudi Arabia, Thailand, and South Korea accounted for the overwhelming

share of authorizations granted for export to nonEU and nonNATO coun

tries in 2002 (Germany, 2003). No comparable information is available for light

weapons.41

Small armsHeckler & Koch is one of Europe’s largest producers of militarystyle small

arms. Heckler & Koch assault rifles and submachine guns manufactured in

Germany, as well as licences for their production abroad, have over the past

decades been exported to a very large number of countries worldwide. In late

2003, the company announced its decision to open a manufacturing facility in

the United States. Next to Heckler & Koch (see the company profile, below),

two comparatively minor German companies produce pistols for law enforce

ment authorities. These are JP Sauer & Sohn and Carl Walther.

JP Sauer & Sohn is a significant producer of military and police pistols

(SIG Sauer) and specialized rifles (Sauer sniper rifles). The company also pro

duces hunting rifles and pistols for the civilian market. In 2003, JP Sauer &

Sohn was awarded a contract for the supply of 250,000 pistols to French police

and border guards (Visier, 2003). Sauer pistols have in the past been supplied

to other European police forces (German, Swedish, and Swiss), as well as to

Jordan and Saudi Arabia (Schaffhauser Nachrichten, 2003).

Between 1976 and 2000, JP Sauer & Sohn was owned by the Swiss company

SIG and part of the group’s small arms division, SIG Arms (see the section on

Switzerland, below) (JP Sauer & Sohn, n.d.). In 2000, the company, along with

the other German and Swiss companies belonging to SIG Arms, was acquired

by two German textile entrepreneurs, Michael Lueke and Thomas Ortmeier.

JP Sauer & Sohn employed around 330 people in 2002 (Döring, 2003).

Carl Walther produces the P99 and its followup version, the P22 pistol (the

series has been produced since 2001) (Westfaelische Rundschau Online, 2001),

as well as G22 rifles used by military and police forces (Carl Walther, n.d.).

Carl Walther employed 190 people in 2002 and had total sales of EUR 24 m.

(USD 22.5 m.), around 70 per cent of which was from export sales (Westfalenpost

Online, 2003). No information is available about the share of military and police

sales in total sales, but the company is planning on ‘substantially increasing’

its activities in the military and law enforcement fields.42 The most significant

contracts in recent years were for P22 pistols for law enforcement forces in

Poland, Canada, and Spain (Westfalenpost Online, 2003).

Parts for the P22 pistols are produced by the Umarex manufacturing facility

(around 220 employees and EUR 35 m. (USD 33 m.) total sales in 2002), which

belongs to the Umarex Group (Umarex Group, n.d.). In 2001, Umarex made an

unsuccessful bid to acquire the Austrian small arms company Steyr Mannlicher

(Meditz, 2001). It acquired Carl Walther in 1993. Umarex Group employed

around 600 people in 2002 (Westfaelische Rundschau Online, 2002).

Blaser produces sniper rifles. Hunting rifles, however, account for the over

whelming share of the company’s business. For a short period in 2000, Blaser

Carl Walther is known by gun aficionados as the producer of the PKK pistol, made famous

in the James Bond novels, and currently markets the new P99, the ‘James Bond pistol’,

referring to the pistol currently used by the film hero/advertisement platform.


was part of the Swiss company SIG Arms (see above) (Blaser, n.d.). The company

employed 125 people in 2000 (Schaffhauser Nachrichten, 2000).

Ammunition manufacturing equipmentMAN Ferrostaal Industrieanlagen (MAN FIA) produced small arms manu

facturing equipment in the past under the name Fritz Werner and is likely to

continue to do so, although no clear information is available about activities

in this field after 2001.

MAN FIA is a subsidiary of Ferrostaal, which in turn is part of the MAN

Group. Before 1990, Fritz Werner was part of the governmentowned Deutsche

Industrieanlagen (DIAG). MAN FIA was established in 2002 through the merger

of Ferrostaal subsidiaries, including Fritz Werner Industrieausrüstungen. The

company employed about 300 people in 2002 and had total sales of EUR 200 m.

(USD 190 m.).

The company has in the past been involved in the establishment of small arms

ammunition facilities in a number of conflictprone countries. Most recently,

Fritz Werner was awarded the prime contract for the production of an ammuni

tion factory for the stateowned Turkish company MKEK in 2000, despite wide

public protest. Subcontracts went to the Belgian company New Lachaussée and

the French Manurhin Equipment (Nassauer, 2000). The contract followed the

sale of a Heckler & Koch HK33 assault rifle production licence to MKEK in 1998.

In the 1970s and 1980s, Fritz Werner established military facilities in, among

others, Iran and Nigeria (AI, 2002; NTI, 2003; Timmerman, 1995). In the 1960s,

the company participated in the establishment of Bharat Fritz Werner in India.

The link to arms producing facilities in Burma goes as far back as the 1950s

(Jane’s Information Group, 1998).43

Light weaponsLFK is the prime contractor for the European Stinger Programme for the pro

duction of the Stinger antiaircraftmissile, including a manportable version.44

Production started in 1993. In cooperation with MBDA, LFK produces the

Milan antitank missile (see above).

LFK is majority owned by EADS Deutschland (formerly DaimlerChrysler

Aerospace). The company will be fully integrated within the European joint

venture MBDA (see above), which currently holds a minority share. No recent

financial or employment data is available for LFK.

Between 1992 and 2002, the light weapons and ammunition producer

Dynamit Nobel was part of Metallgesellschaft (now MG Technologies). Starting

in 2002, Dynamit Nobel divested itself of the military activities of the company

in response to the longstanding ‘unsatisfactory utilization’ of capacity (Dynamit

Nobel, 2001).

In 2000, military sales accounted for 2.5 per cent of Dynamit Nobel’s sales,

worth EUR 65 m. (USD 60 m.), down from close to 20 per cent in the early 1990s,

and included light weapons and their ammunition, including antitank missiles

and rockets, and antivehicle land mines;45 small arms ammunition (military,

police, and civilian); and ammunition components (SIPRI, 2004).

Dynamit Nobel’s light weapons activities were divested in recent years to an

independent company, Dynamit Nobel Defence. No information is available

about the ownership, size, and structure of this company. The Panzerfaust 3

antitank weapon is the company’s most important product. More than 250,000

weapons have been produced since 1990 (Jane’s Information Group, 2004a).

Dynamit Nobel Defence is involved in a cooperation programme with the

Israeli company Corner Shot for the development and production of the Corner

Shot Panzerfaust (Beaver, 2004). Since 1999, the company has also been devel

oping a new shoulderfired grenade launcher, the Matador, in collaboration

with the Singapore government’s military R&D agency and, probably, Singa

pore Technologies Kinetics (a subsidiary of Singapore Technologies Engineering,

by far the largest arms producing company in Singapore), which has been pro

ducing the German Armbrust grenade launcher since the late 1980s (Singapore.

Ministry of Defence, n.d.).

Dynamit Nobel has worked together with Dezamet of Poland on a pro

gramme to integrate the Panzerfaust warhead with the RPG7 rocket launcher.

The RPG7 is a widely used rocketpropelled grenade launcher designed in

the Soviet Union. The new weapon was tested in 2000, but there is no infor

mation about the current status of the programme (Jane’s Information Group,

2004a, p. 421).

Dynamit Nobel’s small arms ammunition business—for civilian, military,

and law enforcement—was divested to a joint venture with the Swiss company


RUAG Munitions in 2002. The new company, RUAG Ammotec, was initially

80 per cent owned by RUAG and 20 per cent by Dynamit Nobel, but had been

fully acquired by RUAG by the end of 2003 (see below).

DynITEC (Ignition Technology Energetic Compounds, formerly the Toisdorf

facility of Dynamit Nobel ExplosivstoffundSystemtechnik Defence Division)

produces components for military ammunition. The company was established

in 2002 and is owned by Junghans Feinwerktechnik of Diehl und Rheinmetall

Waffen & Munition, together with a consortium of company managers (Soldat

& Technik, 2003).

The core business of the Rheinmetall Weapons & Ammunition division is

medium and largecalibre weapons and their ammunition. Rheinmetall left

the small arms market when it sold the trademark of Mauser pistols to JP Sauer

& Sohn in 2000. Together with Diehl (see below), Rheinmetall manufactures under

licence and markets in Europe the manportable Spike antitank missile system,

developed and produced by the Israeli company Rafael. A joint venture, Euro

Spike, was established in June 2004 and is owned by Diehl Munitionssysteme

(40 per cent), Rheinmetall DeTec (40 per cent), and Rafael (20 per cent) via Ercas

—a Dutch holding company wholly owned by Rafael (Rheinmetall, 2004).

Rheinmetall Weapons & Ammunition is part of Rheinmetall DeTec, Europe’s

largest land arms company, with 2003 sales of roughly EUR 1.6 b. (USD 1.8 b.)

—onethird of which falls within the Weapons & Ammunition division. The

division laid off as many as 240 people in response to falling demand for ammu

nition in 2004 (Aguera, 2004). Rheinmetall DeTec is part of Rheinmetall, a joint

stock company whose majority share is controlled by the Röchling family.46

Diehl Munitionssysteme produces hand grenades and medium and large

calibre ammunition, and had total sales of roughly EUR 150 m. (USD 140 m.)

in 2002, employing more than 920 people (Aguera, 2004, p. 32). The company

is part of Diehl VA Systeme, which combines the military and aerospace activi

ties of the Diehl group of companies (Diehl VA Systeme, n.d.). In 2003, Diehl

announced that it planned to merge Munitionssysteme with Bodenseewerk

Geratetechnik and streamline their activities within a new subsidiary, Diehl

BGT Defence (Aguera, 2004, p. 32). Diehl is a familyowned company (Diehl

Stiftung). Military sales accounted for roughly 36 per cent of the company’s

EUR 1.55 b. (USD 1.75 b.) total sales in 2003 (Diehl, n.d.).

SightsZeiss Optronik Wetzlar (formerly Hensoldt Systemtechnik) produces military

sighting equipment, including sights for military small arms. The company

had 2002–03 sales of around EUR 20 m. (USD 22 m.) and employed 70 people

in 2003 (Zeiss Optronik, n.d.). Zeiss Optronik Wetzlar is part of Zeiss Optronik,

a subsidiary of Zeiss.

Euroatlas military electronic equipment includes sights for military small

arms (Euroatlas, n.d.). In 1998, the company was acquired by the fastgrowing

US military electronics manufacturer L3 Communications, a spinoff company

of Lockheed Martin. Euroatlas had total sales of around EUR 7 m. (USD 8 m.)

in 2003 and employed 65 people.

COMPANY PROFILE HECKLER & KOCH

The German company Heckler & Koch is one of the two largest producers of

small arms for military and law enforcement authorities in Western Europe.

The company had total sales of EUR 134 m. (USD 151 m.) in 2003. Twothirds

of sales where derived from military and police sales in 2002 (Schweikle,

2004). Around 75 per cent of total sales were derived from exports in 2003,

with less than 10 per cent of export sales from countries outside Europe and

the United States (Heckler & Koch, 2004).

Heckler & Koch has sales offices in the United States and the UK. In mid

2004, the company had only one manufacturing facility, in Oberndorf, Germany.

Since late 2003, however, it has been building a new manufacturing facility in

the United States.

Employment declined significantly throughout the 1990s, from close to 1,300

in 1990 to around 540 in late 2000, but increased to 600 in 2003, and is planned

to further increase in the near future through the establishment of the US

based manufacturing facility.

Significant employment cuts were carried out in one single year, 1991,

when employment fell by more than 40 per cent. Heckler & Koch faced severe

financial difficulties in the late 1980s, at least partly related to the develop

ment of the G11 caseless ammunition rifle, for which no market could be found.

In 1991, the British land arms producer Royal Ordnance, part of British Aero


space, acquired Heckler & Koch. Small arms production within Royal Ordnance,

which already in the 1970s had acquired Heckler & Koch licences for the pro

duction of assault rifles and submachine guns, was largely taken over by the

German company, which in 2000 was awarded the single largest UK small

arms contract in recent years—a GBP 80 million (USD 120 m.) contract for the

modification of 200,000 SA80 assault rifles (Fletcher, 2000).

British Aerospace announced the decision to sell Heckler & Koch in mid

1999, but was unable to implement it until the end of 2002, when a consortium

of private investors, the Heckler & Koch Beteiligungs GmbH, led by two former

company managers, Ernst Mauch and Dirk Holzknecht, acquired the company.

Lack of clarity persists about the owners of the consortium (Wetzel, 2002).

The new owners decided to divide the activities of Heckler & Koch into a

civilian and a military and law enforcement sector through the establishment

of a new civilian subsidiary, Heckler & Koch Jagd und Sportwaffen (hunting

Table � Available financial and employment data: Heckler & Koch*

2003 2002 2001 2000 1999 1998 1997 1996 // 1994 1993 1992 1991 1990

Total sales �� 0 90 90 �00 70 70 70 �0 90 �00 �0 �00

Civilian % .. 33 .. .. .. .. .. .. .. .. .. .. ..

Military/police %

.. 66 .. .. .. .. .. .. .. .. .. .. ..

Total exports %

75 69 64 66 70 62 50 51 66 57 49 .. ..

Exp. in Europe %

55 42 36 29 43 19 15 17 25 24 .. .. ..

Exp. to USA %

13 16 21 28 20 26 19 19 18 12 .. .. ..

Exp. other regions %

7 11 7 11 7 17 16 15 23 21 .. .. ..

Profit (net) .. .. .. .. .. .. .. .. .. .. .. .. ..

Total employees

�00 �00 ��0 ��0 ��0 ��0 �70 �90 �90 �00 ��0 7�0 �,��0


Sources: Heckler & Koch, direct communication �� September �00�; for �00�: Schweikle (�00�)

Company history ��

1949 Creation of Heckler & Koch (private company)

1958 The company acquires the licence for the production of the CETME/G� assault rifle

1959 Heckler & Koch is awarded a contract for the supply of ��0,000 assault rifles for the German Army

1960s Licences for the production of G� rifles are sold to, among others, Iran, Pakistan, Saudi Arabia, and Turkey

1975 Establishment of a US sales office: Heckler & Koch Inc.

1981 A licence for the production of G� rifles is sold to Burma

1986 Divestiture of the civilian electronics business

1991 The German government postpones the decision about the acquisition of the G�� caseless ammunition rifle

1991 GIAT Industries withdraws from negotiations for the acquisition of Heckler & Koch

1991 Heckler & Koch is acquired by Royal Ordnance (now RO Defence), a subsidiary of British Aerospace (now BAE Systems)

1996 Start of the delivery of G�� assault rifles to the German Army

1998 A licence for the production of the HK�� rifle is sold to Turkey

1998 The Spanish Army adopts the G�� as its new standard assault rifle

1999 Negotiations with the German land weapons company Rheinmetall for a takeover of Heckler & Koch fail

1999 The US small arms manufacturer Colt offers to buy Heckler & Koch for USD �00 million—the bid is rejected

2002 BAE Systems sells Heckler & Koch to a consortium of private investors

2002 The German government refuses to grant an authorization to Heckler & Koch for the export of ��,000 G�� assault rifles to Nepal

2003 Start of the building of a manufacturing facility in the United States

and target weapons) in July 2003. In August 2003, Heckler & Koch Jagd und

Sportwaffen acquired Suhler Jagd und Sportwaffen (140 employees) (Regioweb

Online, 2003).47

Heckler & Koch produces pistols, submachine guns (MP5, UMP, and the

PDW MP7), assault rifles (G36, HK53, HK33), sniper rifles (HK23, HK21),


grenade launchers, and machine guns. The G3 assault rifle, in production

since the 1950s, is one of the most widely used assault rifles worldwide. Pro

duction and marketing rights were sold to an extraordinarily large number of

countries, including a large number of repressive regimes and governments

involved in armed conflicts, from the 1960s up to the 1980s. In the 1960s, G3

licences were sold to countries such as Iran, Pakistan, Saudi Arabia, and

Turkey, and in 1981, the licence was sold to Burma (now Myanmar).49

The new Heckler & Koch assault rifle, the HK50/G36, was adopted by the

German Army in 1996 and by the Spanish Army in 1998. G36 rifles are pro

duced under licence in Spain by Santa Bárbara Sistemas. In 2002, the German

government refused to grant an authorization for the export of 65,000 G36

rifles to the Government of Nepal (Claasen, 2002).

The G36 rifle design has been modified by Heckler & Koch for the US OICW

requirement. The company is part of an industrial team led by the US company

ATK and is responsible for weapon design and production (ATK XM29).

Heckler & Koch is also a significant producer and exporter of submachine

guns. The latest model, the MP7, entered production in 2001. Designated as a PDW,

it is competing with the FN Herstal P90 for the NATO PDW contract award.

In 2003, Heckler & Koch won the contract to supply US Transportation Security

Administration commercial airline pilots with the USP40 pistol. The awarding

of the contract was heavily opposed by US small arms producers (Sia, 2002).

Partly in response to the contract award, Heckler & Koch announced the estab

lishment of its first manufacturing facility in the United States, which is planned

to start producing USP40 pistols and MP5 submachine guns in 2005. The

facility is expected to employ 200 people (Lyne, 2003).

GreeceNo relevant information is available about the size of the Greek arms industry.

Privatization of the stateowned companies within the industry was initiated

in the 1990s, but is far from complete.

A new land weapons company, Hellenic Defence Systems, was established

in January 2004 through the merger of the two stateowned, lossmaking com

panies EBO, Hellenic Arms Industry; and PYRKAL, Greek Powder and Cartridge

Company. The merger, part of a broader stateled restructuring programme for

the Greek arms industry, ends a process started in the early 1990s (Zorzovilis,

2001) and should allow a reduction of overlapping capacities in the field.50

The first contract award was for the production of 120,000 assault riles for the

Greek Army (no information has emerged about the type of assault rifle to be

produced). The company employed around 2,000 people in mid2004 (Inter

France Média, 2004).

EBO was the largest small arms producer in Greece and the only company

producing military small arms. The company was established in 1977 to pro

duce Heckler & Koch G3 assault rifles for the Greek Army. The Aeghion facility

produced G3 rifles, as well as Heckler & Koch machine guns, submachine

guns, and automatic grenade launchers. Under licence from GIAT Industries,

the company produced the WASP antitank weapon. It also produced small

arms ammunition. EBO had total sales, including ammunition sales, of around

EUR 24 m. (USD 21 m.) in 2001 and employed 1,800 people (Epicos, n.d.).

PYRKAL produced small, medium, and largecalibre ammunition within

its military division, as well as ammunition and explosives for civilian appli

cations. From the mid1990s, it participated in the European Stinger missile

programme. The company employed 1,300 people and had record sales of

EUR 70 m. (USD 63 m.)—30 per cent of which was derived from exports—in

2001 (Hellenic Defence Industries, n.d.). The company reports that around 30

per cent of total sales were derived from exports, yet it provided contradictory

information about export destinations to the Hellenic Defence Industries Catalogue,

which lists countries such as Sudan and the DRC among its export destinations.

Neither Sudan nor the DRC were, however, listed as export destinations on

the company’s Web site (PYRKAL, n.d.).

Advanced Weapons Technologies produces antimatérial rifles. Theon

Sensors, formerly Thalis Sensors, produces sights for military rifles, as well

as for Stinger manportable antiaircraft missiles (Theon Sensors, n.d.).

ItalyThe Italian arms industry is highly concentrated. No recent estimates are avail

able about the value of annual sales, nor the level of employment in arms


production. By far the largest arms producing company, the partly stateowned

Finmeccanica group, had military sales of roughly EUR 4.5–5 b. (USD 5–5.6 b.)

in 2003.51 Finmeccanica is a diversified group, producing military aircraft,

military electronics, and land arms, including light weapons—but is neither

a producer of small arms nor of small arms ammunition.

Small armsItaly has, however, a very large number of companies involved in the pro

duction of small arms.52 The province of Brescia in northern Italy accounts for

an overwhelming share of this. The local association of small arms producers,

Consorzio Armaioli Bresciani, represented more than 30 manufacturers of small

arms in 2004, and small arms production is estimated to employ around 5,000

people.53 The owners of the largest company, Beretta, which employs more

than 1,400 people in Brescia, have assumed a central role in local economic

and political life, giving names to schools and retirement homes. Even at the

national level, the Beretta name seems to have some leverage: the idea of giving

the post of Italian ambassador to the United States to the owner and presi

dent of the company, Ugo Gussalli Beretta, was abandoned after wide public

protest in 2002 (Paroli, n.d.).54

The vast majority of companies produce hunting rifles and pistols, primarily

for foreign markets (Ferraglio, 2004). Few companies are involved in the pro

duction of small arms such as pistols and sniper rifles for military and law

enforcement authorities, but they do produce an extraordinarily large number

of tactical shotguns.

The Italian government arms export report has for years topped similar

European government reports in the amount of data supplied. The large amount

of information provided, however, has not made relevant information acces

sible to a broad public. Also, with regard SALW, Italy has so far failed to

provide comprehensible information.

The largest Italian small arms company is, as mentioned above, the family

owned Beretta Holding. During the 1990s, Beretta acquired the previously

independent Franchi and the partly Finmeccanicaowned Benelli and reached

total sales of close to EUR 370 m. (USD 420 m.) in 2003. Sales to military and

police accounted for a minor share of this (see the company profile, below).

Minor companies with a limited production of small arms for police forces

are Fabarm (shotguns) and Tanfoglio (pistols). Bernardelli, a manufacturer of

tactical shotguns and hunting rifles, went into bankruptcy in 1997. In 1998,

the brand and sales rights for Bernardelli small arms were acquired by the

Turkish company Sarsilmaz (AI Italy, 2004).

Light weaponsOto Melara, a subsidiary of Finmeccanica, produces light mortars, military

vehicles, artillery systems, and naval guns (Oto Melara, n.d.). The company

was established in 2001 through the merger of Breda Meccanica Bresciana and

Oto Melara. Oto Melara had total sales of around EUR 250 m. (USD 235 m.) in

2002 and employed 1,400 people—only a few of whom were concerned with

the production of light weapons.

AmmunitionBetween 1991 and 2003, the military ammunition business of Europa Metalli

was set up as a subsidiary company, Europa MetalliSezione Difesa. The sub

sidiary was, however, dissolved in 2003, as orders from the Italian armed

forces were not maintained at the levels expected. Europa Metalli, a company

with around 2,000 employees in 2002, is part of KM Europa Metal (KME), which

is wholly owned by the Italian group Società Metallurgica Italiana (SMI).

Simmel Difesa produces mortar ammunition. The company was controlled

by Fiat from 1988 to 2000. No information is available about current owner

ship relations. Since the late 1980s, when all civilian production was stopped,

Simmel Difesa has produced only military ammunition.55

Simmel Difesa had total sales of around EUR 60 m. (USD 56 m.) and EUR

80 m. (USD 72 m.) in 2002 and 2001, respectively, and employed 162 people in

2002, down from 173 in 2001 (Mediobanca, 2003). Exports accounted for around

70 per cent of total sales, half of which went to nonNATO countries (Simmel

Difesa, n.d.).

Società Esplosivi Industriali (SEI) produces military explosives, as well as

sea mines and bombs. It acquired the production rights for MISAR grenades,

including hand grenades, from car maker Fiat in 1995. SEI is owned by the

French Societe Anonyme d’Explosifs de Produit Chimique (SAEPC).56


SightsOfficine Galileo produces SALW sights. The company is part of Finmeccanica

and is one of Italy’s largest military electronics companies, producing primarily

avionic systems and electronics for military vehicles.

COMPANY PROFILE BERETTA

Beretta Holding is the secondlargest small arms producing company in Western

Europe. Company sales amounted to EUR 370 m. (USD 420 m.) in 2003—

however, only a minor share of these, or 8 per cent in 2003, was derived from

military and law enforcement sales, according to information provided by the

company. Clothing and small arms accessories accounted for as much as 4 per

cent of total sales, or EUR 15 m. (USD 14 m.) in 2002.

Foreign sales account for the overwhelming share of company sales, 84 per

cent of total sales in 2003, a significant part of which involves direct exports

from Italy. Insufficient information is available on the sales derived from mili

tary and law enforcement exports. According to the Italian government arms

export report, the value of exports of controlled weapons by Fabbrica d’Armi

Pietro Beretta, the group’s main subsidiary, amounted to around EUR 8 m.

(USD 7.5 m.) in 2002 (Banche Armate, 2002).

Similar to other European small arms companies, Beretta is heavily depen

dent on the US market. More than 50 per cent of total sales were derived from

sales in the United States and Canada in 2003. Around 20 per cent of employees

were located in North America.

Beretta Holding was established in 1995 around the largest Italian small arms

company, Fabbrica d’Armi Pietro Beretta. The holding company acquired a

number of smaller Italian and foreign small arms producers between 1995

and 2000, most importantly the Italian companies Benelli and Franchi, and

the Finnish Sako (see Table 9). As a result, employment increased significant

ly throughout the period and total sales grew by close to 50 per cent between

1995 and 2003.

Beretta manufacturing facilities are located in Italy (about onethird of total

employees in 2002), in Finland, and in the United States. The US facility was

established in the early 1980s following the award of a contract for the supply

Table 9 Available financial and employment data: Beretta Holding and its major subsidiaries, Fabbrica d’Armi Pietro Beretta and Benelli*

Beretta Holding 2003 2002 2001 2000 1999 1998 // 1995

Total sales ��9 ��7 ��7 ��0 ��7 ��

Military/police sales

�0 �7 �7 .. .. .. ..

Civilian % 92 90 87 .. .. .. ..

Military % 1 1 .. .. .. .. ..

Police % 7 9 .. .. .. .. ..

Profit (net) �� 7 �� .. �0 �0 ��


84 83 83 82 80 77 64

Europe % 27 23 21 19 21 20 ..

USA and Canada %

52 53 54 57 52 48 ..

Total employees �,�� ,�� ,��9 �,0�� ,�� ,9�0 �,��

In Italy �,�� ,�� ,�9� �,�9� .. .. ..

In North America �70 �� 0 .. .. ..

Fabb. d’Armi P. Beretta

2003 2002 2001 2000 1999 1998 // 1995 // 1993 // 1991

Total sales ��0 ��9 �� 9 ��0 ��9 �� 9

Civilian % .. .. 87 .. .. .. .. 66 80

Military/police % .. .. 13 .. .. .. .. 33 20


73 .. 82 .. 80 .. 64 56 68

Foreign military/police %

.. .. .. .. .. .. .. 9 15

Total employees 99� �,0�� 9�9 909 90� 9�� ,0�� 9�� ,0��

Benelli 2003 2002 2001 2000 1999 1998 // 1995 // 1993 // 1991

Total sales 7� 7� .. .. .. .. .. .. ..


77 .. .. .. .. .. .. .. ..

Total employees �� 7 .. .. .. .. .. .. ..


Sources: Beretta Holding (�99�; �000; �00�); Brunelli (�00�); Mediobanca (�00�)


The Beretta 92 semiautomatic pistol, produced since the 1970s, is likely to

be the most important military and law enforcement weapon for the company.

These pistols were sold to US military and police forces, to the Italian armed

forces, and the French Gendarmerie Nationale and Air Force, as well as to

Brazil, Chile, and Iran (Jane’s Information Group, 2004a). They were/are manu

factured under licence in Egypt and France.59 In 2002, Beretta was awarded a

contract for the supply of Beretta 92 pistols to the Spanish Civil Guard (Berretta

Holding, 2003).

The NetherlandsNo company in the Netherlands produces military small arms. Production of

small arms ammunition has been discontinued.

Eurometaal (formerly the stateowned ArtillerieInrichtingen) was the largest

Dutch ammunition manufacturer, producing medium and largecalibre ammuni

tion and ammunition components (Eurometaal, n.d.). Eurometaal (200 employees)

and its subsidiary, Franerex (50 employees), were closed in April 2002. The

closure was motivated by the decline in the demand for military ammuni

tions in recent years (Eurometaal Holding, 2002). Eurometaal was the military

subsidiary of Eurometaal Holding, which was owned 86.6 per cent by the

German company Rheinmetall and 13.4 per cent by the Dutch state.60

Muiden Chemie International (MIC) produces ammunition propellants. In

the late 1980s, it was revealed that the company had delivered military equip

ment to both Iran and Iraq during their war. In 1990, the company went bankrupt

and was acquired by the British land arms producer Royal Ordnance, now

RO Defence, a subsidiary of BAE Systems. In 2003, RO Defence announced

the closure of MIC by mid2004.

SightsTogether with the French company GIAT Industries, Thales Optronics, part of

Thales Nederland (formerly ThomsonCSF Signaal), participated, in the compe

tition for the French FELIN contract, which was awarded to a competitor in 2004.

Thales Optronics’ parent company, the French military electronics company

Thales, is involved in similar programmes in other countries (see above).

Company history

1526 First reference to Beretta

1985 Contract awarded for the supply of pistols to the US armed forces

Early 1980s Establishment of Beretta USA

1991 Contract awarded for the supply of assault rifles to the Italian armed forces

1995 Formation of Beretta Holding

1995 Beretta acquires the Italian small arms company Franchi

1998 Beretta acquires the remaining shares of the Italian small arms company Benelli

2000 Beretta acquires the Finnish small arms company Sako

2002 Beretta acquires the Turkish small arms company Vursan Silah Sanay (90 employees in �00�) (Vursan Silah Sanay, n.d.)

2002 Beretta acquires the US-based Burris Optics, producing sights for hunting rifles (7� employees in �00�) (Burris Optics, n.d.)

Late 1990s End of the delivery of the AR70/90 assault rifle to the Italian armed forces

of Beretta 92 semiautomatic pistols for the US armed forces. A total of around

500,000 pistols have been delivered (WaffenHQ, n.d.).

The most important subsidiaries of the holding are: Fabbrica d’Armi Pietro

Beretta (Italy), Benelli (Italy), Franchi (Italy), Beretta USA (United States) estab

lished in 1985, and Sako (Finland), acquired in 1999. All companies produce

primarily civilian, but also some military small arms.

Beretta companies produce a range of small arms for military and law enforce

ment forces, most importantly the AR70/90 assault rifle, the Beretta 92 semi

automatic pistol, the M12 submachine gun, and the SPAS15 combat shotgun.

The Italian Army adopted the AR70/90 assault rifle in 1990. Deliveries to the

Italian forces ended in recent years and no major foreign army adopted the

rifle.57 As a result, military and law enforcement sales declined significantly,

by 28 per cent in 2002 alone.

The Beretta M12 submachine gun was adopted by Italian forces in the late

1950s, and was later sold to the armed forces of a large number of Asian,

African, Middle Eastern, and South American countries.58 Production licences

were sold to Brazil and Indonesia (Jane’s Information Group, 2004a).


NorwayNorwegian arms producing companies produced military goods worth around

EUR 800 m. (USD 750 m.) in 2002, according to the national arms industry

association, Norwegian Defence Industry Group (Norwegian Defence Industry

Group, n.d.b). No company produces military small arms. A number of Norwe

gian companies, however, are producers of ammunition and components for

SALW.

Norway’s largest arms producing company, Kongsberg/Norsk Forsvars

teknologi, produced small arms in the past. In the late 1990s, however, the

Norwegian arms industry discontinued the production of military small

arms.61

In 2004 the Norwegian Army was in the process of selecting a replacement

for its standard G3 assault rifle, first fielded in the late 1960s. While the winner

of the contract has yet to be announced, it is likely that the new rifles will be

imported and will not be produced under licence in Norway.

Norway has also initiated a Soldier Modernization Programme, Norwegian

Modular Arctic Network Soldier (NORMANS), which is currently in the R&D

phase.

Light weapons and ammunitionNammo Raufoss produces small and mediumcalibre ammunition and light

antitank weapons, besides artillery ammunition and rocket motors.62 It em

ployed around 600 people in 2003. Around 70 per cent of total production is

exported (Nammo, n.d.). The company is part of Nammo, jointly owned by

the Norwegian government (45 per cent), Saab of Sweden (27.5 per cent), and

Patria of Finland (27.5 per cent).

The defence products division of Dyno Nobel Europe produces explosives

for light weapons at the Engene plant in Norway (Army Technology, 2004a;

Norwegian Defence Industry Group, n.d.a; Dynamit Nobel, n.d.). Dyno Nobel

is an international Norwegianowned corporation that specializes in the manu

facture of explosives and chemicals. It is one of Norway’s largest companies,

with more 5,000 employees worldwide. In May 2003, Dyno Nobel and the

Americanbased EnsignBickford Industries (EBI) merged their explosives

capabilities, creating one of the world’s largest explosives company.

SightsSimrad Optronics produces laser gun sights. It has a subsidiary in the UK and

opened a sales office in the United Arab Emirates in 2004 (Simrad Optronics,

2003). Since 1999, Simrad Optronics has been part of the Norwegian Technor

group, a private stock company (Simrad was previously owned by Kongsberg).

No recent data is available about the size of the company. Together with another

Technor subsidiary, Haaland, Simrad Optronics had sales of roughly EUR 25 m.

(USD 28 m.) in 2003. The company won a major contract for artillery fire control

systems in 2002 and had a military order backlog of around EUR 45 m. (USD

42 m.) (Simrad Optronics, 2002).

Vinghøg produces weapons sights, including sights for SALW (Vinhøg, n.d.).

A Vinghøg sight, the Vingsight FCS, was selected as the primary sight unit in

the R&D phase for the NORMANS programme.

PortugalPortugal belongs to the group of minor arms producing countries in Western

Europe. No significant military small arms and small arms ammunition manu

facturing capabilities subsisted by mid2004.

The amount of clear information about the current size of and developments

within the Portuguese arms industry is very limited, despite the fact that the

government publishes a yearbook of military statistics. Among other informa

tion, this report has included a section on the national arms industry since the

mid1990s (Portugal, 2001).

Employment in all the major stateowned arms producing companies,

OGMA (aircraft parts and maintenance), Arsenal do Alfeite (warships), OGFE

(land arms), OGME, and Indep (small arms, light weapons, and their ammu

nition) declined significantly during the 1990s.

In 1997, the government established the arms industry holding company,

Empordef (Empresa Portuguesa de Defesa), with the task of overseeing the

rationalization and privatization of the arms industry (excluding the ship

building industry).

In 1961, during the Salazar dictatorship, Portugal acquired a licence for the

production of the Heckler & Koch G3 assault rifle. In 1980, the two SALW


producing companies Fábrica Militar de Braço de Prata and Fábrica Nacional

de Munições de Armas Ligeiras were merged into a single stateowned company,

Indústrias Nacionais Defesa (Indep). Besides assault rifles, submachine guns

(Lusa), and machine guns (Heckler & Koch HK21), Indep produced small arms

ammunition, mortars, and mortar ammunition.

According to official data, Indep had total sales of around EUR 5 m. (USD

4.5 m.) in 2001, employing 144 people (Portugal, 2001). Employment was re

duced drastically throughout the 1990s, from more than 900 people at the

beginning of the decade to less than 400 in 1999 (Portugal, 2001).

At the end of 2003, Indep sold its small arms ammunition manufacturing

equipment (produced by the German company Fritz Werner) to the Spanish

land arms company General Dynamics Santa Bárbara Sistems (General Dynamics

Santa Bárbara Sistemas, 2003b). In mid2004, Empordef announced that Indep

was to be closed down (De Mendia, 2004).

Sociedade Portuguesa de Explosivos (SPEL) produced military explosives

(including hand grenades) in the past, but has produced only civilian explosives

since 2000 (SPEL, n.d.). It is 51 per cent owned by Empordef and 40 per cent

by the Spanish Union Española de Explosivos (UEE). The company employed

250 people in 1999, the most recent year for which information is available

(Portugal, 2001).

SpainAccording to official statistics, the Spanish arms industry produced on average

military equipment worth roughly EUR 2.2 b. (USD 2 b.) per year in the period

2000–02 and employed around 20,400 people in arms production. Around 11

per cent, or EUR 240 m. (USD 220 m.) of total military sales were derived from

the sales of ‘weapons and ammunition’ (Spain, 2002). No information is avail

able about the share of SALW in this figure.

The export value of controlled military goods—much more narrow a cate

gory than that of ‘military equipment’, mentioned above—amounted to EUR

275 m. (USD 259 m.) in 2002. Of this amount, EUR 6 m. (USD 5.7 m.) and EUR

8 m. (USD 7.5 m.) related to small arms (including ammunition) and light

weapons (including ammunition), respectively (Spain, 2002).

General Dynamics Santa Bárbara Sistemas—a land weapons manufacturer

producing military vehicles, artillery, and ammunition—is the only Spanish

company with significant capabilities for producing militarystyle small arms.

Besides assault rifles, Santa Bárbara Sistemas produces grenade launchers and

small arms ammunition (see the company profile, below).

A number of minor companies involved primarily in the production of civil

ian pistols and revolvers went into bankruptcy in the late 1990s. Star Bonifacio

Echevarría and Astra Unceta y Cía closed in 1996. In 1997, former employees

of the companies created Astar Sal (Agrupación Social Trabajadores Armeros

Sociedad Anónima Laboral), which in turn went bankrupt only a few years

later (Angulo, 2001). A third company, Llama Gabilando, went bankrupt in

2000. Here also, former employees formed a new company, Fabrinor Arma

Corta y Microfusion SAL, which went bankrupt in 2002. A minor company,

DC Custom Armeros (DC Customs Ameros, n.d.), producing parts for pistols

for military and civilian use, with annual sales of just over half a million euros,

is the only company left within the sector (Hita, 2002).

Explosivos Alaveses (EXPAL) produces military explosives and ammunition

for light weapons. The company attracted public attention in the past because

of its supply of military equipment to both sides in the Iran–Iraq war in the

1980s, and its production of antipersonnel mines up until the mid1990s (ICBL,

2000; Centre d’Estudis, 2004a).

The company employed around 250 people in 2002–03 and includes Explo

sivos de Burgos, Fabricaciones Extremeñas, and Bresel.63 In April 2004, EXPAL

announced the closure of one of its facilities, which had been running at only 20

per cent of its capacity in recent years (Mondragón & AbásoloVitori, 2004). EXPAL

is the military division of UEE (UEE Defensa, n.d.). UEE has been majority

owned since 1994 by a Dutch investment company, Pallas Investments (owned

by Swiss Bank Corp, AGF, Crédit Lyonnais, and Elf Aquitaine) (Spain, n.d.c).

According to the Spanish small arms and ammunition industry association (Asociacíon

Armera), the small arms sector had annual sales of around EUR �� million, with exports

accounting for roughly �0 per cent of this, and close to �,�00 employees in �000 (Hita,

�00�). No information is provided as to what this estimate includes.


Esperanza y Cia (ECIA), a former producer of mortar ammunition, is no

longer involved in military production. It is majority owned by UEE (Centre

d’Estudis, 2004b).

Instalaza produces mortar bombs, hand grenades, grenades for rifles, and

grenade launchers (Instalaza, n.d.). The company had around 140 employees

and total sales of around EUR 70 m. (USD 75 m.) in the late 1990s (Spain,

n.d.a).

COMPANY PROFILE SANTA BÁRBARA SISTEMAS

Santa Bárbara Sistemas was state owned until 2001, when it was acquired by

the US company General Dynamics (General Dynamics Santa Bárbara Sistemas,

n.d.), which has positioned itself as one of the major Western European land

weapons producers through a series of acquisitions.64

Within Santa Bárbara Sistemas, small arms production is carried out in the

Corunna facility in northwestern Spain. Of the more than 2,300 employees,

only around 200 were employed at this facility in 2003, which, besides assault

rifles, produces components for military vehicles (General Dynamics Santa

Bárbara Sistemas, 2003a).

In the past, the Corunna facility produced the CETME rifle and the AMELI

machine gun. Production of the basic model of the CETME assault rifle, devel

oped by the Centro de Estudios Técnicos de Materiales Especiales (CETME),

was initiated in the 1950s.65 Production of upgraded models of the rifle, devel

oped in collaboration with the German company Heckler & Koch, continued to

the end of the 1980s. Production of the CETME model L and LC began in 1984.

The rifle was adopted by the Spanish Army and entered service in 1988.

Small arms production at the Corunna facility had practically stopped when

the Spanish Ministry of Defence opened the competition for a new assault

rifle in the mid1990s to replace the CETME L after only 10–15 years in service.

Trials for a new rifle began in 1996 and in 1999 the contract was awarded to

Heckler & Koch for G36 E rifles.

Only around 15,000 of a total of up to 115,000 rifles were to be produced by

Heckler & Koch itself (Spain, n.d.b). In 2001, Santa Bárbara Sistemas was

awarded a first contract for the production under licence of 56,000 rifles.

Under the current contract, Santa Bárbara Sistemas plans to produce around

10,000–12,000 per year until 2005.

Expectations of maintaining and modernizing small arms production at the

Corunna facility are directly linked to the production under licence of the

Heckler & Koch assault rifles and continued close collaboration with the German

company. According to company information, around EUR 5 m. was invested

during 2000 and 2001 (General Dynamics Santa Bárbara Sistemas, 2003a). In

2003, Heckler & Koch and Santa Bárbara Sistemas set up a new joint venture,

Sistemas de Armamento Ibericos (SAI), for the development and manufac

ture of small arms for foreign markets. Production is planned to take place at

the Corunna facility. Heckler & Koch and Santa Bárbara Sistemas are to invest

around EUR 7 m. in the new operation (Ing, 2003; General Dynamics Santa

Bárbara Sistemas, 2003b).

In 2003, Santa Bárbara acquired a Fritz Werner small arms ammunition plant

from Indep, Portugal. The plant was installed at Santa Bárbara’s Placencia

facility. The company is currently participating in a team competing for a

major US Army small arms ammunition contract award (General Dynamics

Santa Bárbara Sistemas, 2004).

SwedenSweden has a large arms industry. It sold military equipment for roughly EUR

2.7 b. (USD 3 b.) in 2003 and employed around 14,000 people in arms produc

tion. A very large share of total sales, close to 40 per cent, was derived from

exports (FIF, 2004b).

Major products include combat aircraft, electronic equipment, and land

arms, including light weapons—but not small arms. By far the largest Swedish

arms producer, the military diversified Saab group, produces portable guided

weapons and is involved in the European Nammo and Eurenco ammunition

and explosives joint ventures.

The Swedish government report on arms exports does not provide informa

tion on the combined value of exported light weapons, as they are included

within broader categories (Sweden, 2004).


Light weapons and ammunitionA detailed profile of Saab, the parent company of Saab Bofors Dynamics, is

provided below.

Eurenco Bofors (formerly Nexplo Bofors, the Swedish part of the Finnish–

Swedish joint venture Nexplo Industries) is part of the European explosives

and propellant company Eurenco, established in January 2004.66 Eurenco Bofors

produces, among other things, propellants for medium and largecalibre ammu

nition; mortar increments; and military, hunting, and sporting ammunition.

Nammo Sweden develops and produces military small arms ammunition.

The company is part of Nammo, jointly owned by the Norwegian govern

ment (45 per cent), Saab of Sweden (27.5 per cent), and Patria Industries (27.5

per cent). Nammo Sweden had military sales of around SEK 300 million (USD

37 m.) in 2003 (56 per cent of total sales) and employed 220 people in military

related production (out of a total of 345).67

Chematur Engineering produces explosives and propellants.

SightsAimpoint produces sights (Red Dot Reflex Sights) for military and civilian

firearms. Aimpoint sights have been bought by the Swedish, French, and US

Armies (Aimpoint, n.d.).

COMPANY PROFILE SAAB

Saab produces portable antitank and antiaircraft weapons within Saab Bofors

Dynamics. Saab is the largest arms producer not only in Sweden, but in the

Nordic countries as a whole. The group had total sales of close to EUR 2 b.

(USD 2.25 b.) in 2003, 80 per cent of which was from military products and

services, and employed more than 13,000 people (Saab, 2004).

Saab was only marginally involved in land arms until 1999, when it acquired

the diversified military company Celsius (Saab, 1999). Electronics and aero

space are by far the largest business areas of the group. Saab sold part of the

land arms activities of the former Celsius, Bofors Weapon Systems, producing

military vehicles, artillery, and ammunition, to the US company United Defense

soon after its acquisition in mid2000 (Saab, 2000).

Saab is owned by BAE Systems, UK (35 per cent), the Swedish investment

holding Investor (36 per cent), Wallenberg foundations (6 per cent), and invest

ment funds and banks (around 23 per cent).

Saab Bofors Dynamics produces antitank weapons (the CarlGustaf recoil

less rifle, MBT LAW, AB AT4, and BILL2) and antiaircraft weapons (RBS70)

(Saab, n.d.). Besides manportable weapons, the company produces a wide

range of air and sea missiles.

The company is organized as a business area of Saab. Its activities were

streamlined after Saab’s acquisition of Celsius in 1999–2000, resulting in a signi

ficant reduction in employees. Saab Bofors Dynamics had total sales of roughly

EUR 350 m. (USD 400 m.) and employed more than 1,700 people in 2003 (Saab,

2004b). No information is available about the share of this amount that is related

to the production of manportable weapons.

The CarlGustaf recoilless rifle, developed in the 1940s, is still produced and

has been exported to a large number of countries, including in Africa (Ghana

and Nigeria), Latin America (Belize and Venezuela), and Asia (India, Malaysia,

and Singapore) (Jane’s Information Group, 2004a). According to Swedish NGOs,

CarlGustaf rifles were also exported to Burma/Myanmar in the early 1980s,

and were reexported from Singapore to guerrilla forces in Cambodia in the

late 1980s (Ångström, Jiborn & Westander, 1995). Saab Bofors Dynamics also

produces the ammunition for the CarlGustaf rifle.

A licence for the production of CarlGustaf rifles was sold to the Indian

Ordnance Factory Board in the mid1970s. The rifles have been used in the

Kashmir conflict, as well as in the civil war in Sri Lanka, which Indian forces

were directly involved in. In 2002, Saab Bofors Dynamics received a EUR 35 m.

Table �0 Available financial and employment data for Saab Bofors Dynamics*

2003 2002 2001 2000 1999**

Total sales ��0 ��0 �90 ��0 �00

Total employees �,7�� ,90� �,90� �,�� ,��

* Sales data is in EUR millions at constant �00� prices.

** Data for �999 is pro forma. Saab acquired and integrated the activities of the Celsius group during �999–�000.

Sources: Saab (�00�; �00�; �00�; �00�b)


(USD 33 m.) contract for the export of the upgraded version of the weapon. The

Swedish government authorized the export as a followon order to the original

contract with India, despite strong protest from NGOs (Lindahl, 2002).

Besides the CarlGustaf rifle, Saab Bofors Dynamics produces the BILL anti

tank guided weapon. BILL2, a further development of BILL1, is in service

with the Swedish Army. The company also produces the AT4 antitank weapon,

which is also produced under licence in the United States by ATK. In collabora

tion with Thales Air Defence (see the UK section, below), Saab Bofors Dynamics

is developing a new portable antitank weapon, the MBT LAW (main battle

tank light antitank weapon) for the British Army. Following the awarding of

the British contract in 2002, the weapon is likely to be also acquired by the

Swedish Army. It will be assembled in Northern Ireland by Thales Air Defence.

Other partners in the team are BAE Systems, FRHiTEMP, Raytheon Systems

Ltd., and Thales Missile Electronics (Global Defence Review, 2004).

Saab Bofors Dynamics also produces portable antiaircraft weapons (the RBS70,

produced since the 1970s) and their missiles (the RBS70 missile and the new

Bolide missile, which can be fitted on the RBS70 system). The RBS70 has been

exported to 13 countries, including Australia, Argentina, Bahrain, Brazil, Indo

nesia, Iran, Ireland, Norway, Pakistan, Singapore, Tunisia, and the United Arab

Emirates (Army Technology, 2004b). Saab Bofors Dynamics is also involved in

the development of thermobaric weapons (WildeggerGaissmaier, 2004).

From the late 1980s, Saab produced FN Herstal assault rifles (the FN FNC,

developed into the CGA5) under licence for the Swedish Army (a total order

of 250,000 rifles). In the late 1990s, Saab Bofors Dynamics introduced a new

PDW, the CBJMS, which has, however, not entered serial production (Mulcahy,

n.d.; SecurityArms.com, 2001).

Saab is conducting a Soldier Modernization Programme, the Saab Warrior

system (Hoving, 2003). The Swedish Army is in the initial stages of its own

Soldier Modernization Programme, MARKUS (Markstridsutrustad Soldat).

SwitzerlandDirect employment in arms production in Switzerland fell from around 9,700

to 3,700 between 1990 and 2000, according to available estimates (Hug, 2000).68

Restructuring of the Swiss arms industry took off only in the late 1990s, involving

significant changes in ownership and structure (corporatization, privatization,

and internationalization) and further downsizing. The military vehicle company

Mowag became part of General Motors (USA) and subsequently of General

Dynamics (USA). Oerlikon Contraves, a producer of antiaircraft systems, was

sold to the German company Rheinmetall. RUAG Swiss/Suisse was established

as a private stock company from the arms producing companies formerly owned

by the Swiss federal government (RUAG, 2004b).

The production of militarystyle small arms, however, was practically dis

continued. In the autumn of 2000, the diversified industrial conglomerate SIG

sold its small arms activities within SIG Arms to two German textile entre

preneurs. Employment cuts following the change in ownership drastically

reduced the size of the Swissbased facilities of the former SIG Arms group.

These are likely to retain a marginal role in the military and law enforcement

sector as producers of rifles for special forces and as suppliers of parts and

SAN Swiss Arms

The five companies combined within SIG Arms (the original small arms activities of SIG: Haemmerli, acquired by SIG in �97�; Blaser of Germany, acquired in �000; JP Sauer & Sohn of Germany, acquired in �97�; and SIG Arms Inc. in the United States) produced military rifles, hunting rifles, pistols, and gun barrels. A major part of past military production (SG��0 and SG��0/Sturmgewehr 90 assault rifles) took place in Switzerland. SG��0 assault rifles, developed in the mid-�970s, have been exported to a large number of countries in South America, Africa, and the Middle East. They are also produced under licence in Chile. The modified version, the SG��0, was adopted by the Swiss Army under the name Sturmgewehr 90 in the mid-�9�0s. The Swiss Army contract, for a total of ��0,000 rifles, ended in �999 (Der Bund, �999). After their divestiture from SIG, the five companies were re-established as independent companies. Total employment within SIG Arms amounted to �00 in �000, but only a minor share of this figure, or around �00 people, was in its Swiss facilities.�9 After the change in ownership, drastic employment cuts of more than �0 per cent were carried out within SAN Swiss Arms (including the original small arms activities of SIG) and Haemmerli (pistols and rifles for competition shooting). Employment in SAN Swiss Arms and Haemmerli was down to �0 and �0, respectively, by mid-�00� (Schaffhauser Nachrichten, �000). SAN Swiss Arms produces pistols, hunting rifles, and military rifles for special forces (Schaffhauser Nachrichten, �00�). The company also produces barrels for rifles.

70 Small Arms Survey Occasional Paper 16 Reinhilde Weidacher Behind a Veil of Secrecy 7�

components, in particular through their close link with the German company

JP Sauer & Sohn.

Small arms and their parts accounted for a small share of total Swiss arms

exports in 2004, or less than 4 per cent, according to official statistics. Switzer

land exported small arms and parts (military and law enforcement weapons,

but also civilian small arms) to the value of roughly EUR 9 m. (USD 10 m.), EUR

11 m. (USD 10 m.), EUR 8 m. (USD 7 m.), and EUR 9 m. (USD 8 m.) in 2003, 2002,

2001, and 2000, respectively.70 By far the largest recipient in recent years was

Germany, which most likely received deliveries of parts for JP Sauer pistols.

A small company (with only 20 employees), Brügger & Thomet (B&T), has

entered the market for specialized submachine guns, but primarily produces

silencers (B&T, n.d.). B&T acquired the production rights for the Steyr Mann

licher TMP and redesigned it into the B&T MP9 TMP. The company also pro

duces the Heckler & Koch MP5 submachine gun.

AmmunitionRUAG Ammotec produces small arms ammunition (military, police, and civil

ian). See the detailed company profile for RUAG, below.

SightsILEE (Industrial Laser and Electronic Engineering) produces laser target point

ers for small arms (ILEE, n.d.). Since 1997, the company has been part of the

Swiss company Oerlikon Contraves, which was acquired by the German com

pany Rheinmetall in 1999.

Vectronix, formerly the military optronics branch of the German company

Leica, was acquired by the French SAGEM (see above) in early 2003. Vectronix

had sales of around EUR 50 m. (USD 47 m.) in 2002, around 25 per cent of which

was with the US Army (Pressetext.at, 2003). The company employed around

100 people in 2004 (Pengelley, 2004).

COMPANY PROFILE RUAG SWISS/SUISSE

The stateowned RUAG Swiss/Suisse is one of the largest small arms ammuni

tion producers in Western Europe. RUAG also produces hand and rifle grenades,

mortar ammunition, mortars, and antitank warheads. The company is also

involved in the development of thermobaric weapons (WildeggerGaissmaier,

2004). Activities related to demining and disposal of ordnance (Explosive

Ordnance Disposal) account for a minor share of company sales (Direktion für

Sicherheitspolitik VBS, n.d.).

RUAG’s largest business areas are, however, aerospace and largecalibre

weapon systems, accounting for roughly onefourth and onefifth of company

sales in 2002, respectively. The company employed around 5,700 people in

2003 and had total sales of close to EUR 800 m. (USD 900 m.), more than two

thirds of which was from military products. About 10 per cent of total sales

were derived from exports outside Europe, half of this amount from exports

to the United States and Canada (RUAG, 2004c).

The company is facing falling orders from the Swiss armed forces. As a

result of acquisitions (aerospace, ammunition), total employment has increased

over recent years. At the same time, however, significant employment cuts

were carried out within some group companies.71

Table �� Available financial and employment data: RUAG*

2003 2002 2001 2000 1999

Total sales 7�0 ��0 ��0 ��0 ��0

Civilian % 32 25 �� 19 12

Military % 68 75 7� 81 88

Swiss military % 42 60 .. .. 85

Foreign military % 26 15 .. .. 3

Profit (net) �0 �0 �0 �0 �0

Total foreign sales % 49 28 19 10 8

Europe % 38 19 .. .. ..

USA and Canada % 5 6 .. .. ..

Middle East % 4 2 .. .. ..

Total employees �,�� ,�� ,�� ,�00 �,��0

* Financial data is in EUR millions at �00� constant prices.

Sources: RUAG (�00�; �00�; �00�; �00�)

7� Small Arms Survey Occasional Paper 16 Reinhilde Weidacher Behind a Veil of Secrecy 7�

The Swiss federal government consolidated its armsproducing activities

under the Department of Defence, Civil Protection, and Sportscontrolled

Federal Armaments Factories (Eidgenössische Rüstungsbetriebe) within four

newly established subsidiaries in 1996: the Swiss Electronics Enterprise, the

Swiss Aircraft and Systems Company, the Swiss Ammunition Enterprise, and

the Swiss Enterprise for Weapon Systems.72 Federal Armaments Factories

was established as a private stock company, fully owned by the Swiss federal

government, in 1999, and renamed RUAG Swiss/Suisse (RUAG, 2004b).

The transformation from a subsidiary unit of a state department into a public

company allowed RUAG to establish industrial alliances with other compa

nies, domestic as well as foreign (Hug, 2003). In 2001, RUAG established an

alliance with one of the largest US ammunition producers, ATK (ATK, 2001).

The share of sales to the Swiss armed forces declined from 86 per cent in 1999

to 42 per cent in 2003.

During the same period, the share of civilian sales (parts for the automotive,

semiconductor, and mechanical engineering industries) increased to 32 per

cent. Significant parts of civilian activities, the metal processing and machining

tooling activities of RUAG, were spun off from RUAG Munition in 2002 into

a new subsidiary, RUAG Components (RUAG, 2002a). The company also sells

and liquidates discarded military equipment and surplus military vehicles for

the Swiss armed forces.

Smallcalibre ammunition accounted for roughly 10 per cent of RUAG total

sales in 2002 (RUAG, 2002a). RUAG Ammotec, the smallcalibre ammunition

subsidiary, was established in 2002 through the merger of the smallcalibre

ammunition business of RUAG and Dynamit Nobel. The company employs

around 1,280 people (RUAG, 2004c) and was expected to generate total sales of

about EUR 160 m. (USD 180 m.).

RUAG Ammotec has manufacturing facilities in Germany (around 850

employees) (RUAG, 2004c), Switzerland, and Sweden (MaritimeIndex.com,

2002). While RUAG Ammotec was originally 80 per cent owned by RUAG

and 20 per cent by Dynamit Nobel, by the end of 2003, RUAG was the sole

owner of the company. Also in 2003, RUAG Ammotec acquired the brand

and sales rights to the smallcalibre ammunition of the Austrian Hirtenberger

Group (RUAG, 2003a).

RUAG decided to streamline its ammunition activities in mid2004 as a

response to declining orders in small, medium, and largecalibre ammunition

(RUAG, 2004a). According to its plans, the medium and largecalibre busi

ness of RUAG Munition will, together with RUAG Components and RUAG

Land Systems, become part of a new defence unit.

United KingdomThe UK arms industry is the largest in Western Europe. Direct employment

in arms production in the UK was estimated at around 155,000 people in 2001–

2002 (UK, 2003). By far the largest producer of military equipment in the UK

is BAE Systems, a company involved in virtually all armaments sectors, with

roughly 40,000 employees in the UK.

Throughout the 1990s, the overwhelming part of military small arms pro

duction in the UK, in particular the production of standard military small arms,

was carried out within a subsidiary of British Aerospace, now BAE Systems.

By 2004, however, small arms production was marginal within overall arms

production. British Aerospace acquired the German small arms manufacturer

and designer Heckler & Koch in 1991 and consequently reduced and eventually

discontinued small arms production in the UK.

In 2001, BAE Systems set up a Soldier Modernization team (BAE Systems,

2001) to compete for the UK FIST contract award. The contract for the assessment

British Aerospace/BAE Systems

Royal Ordnance had been producing Heckler & Koch G� assault rifles and MP� sub-machine guns under licence since the �970s before British Aerospace acquired Heckler & Koch in �99�. Until �99�, the British Army’s standard SA�0 assault rifle, developed by the Royal Small Arms Factory, was produced by the land weapons subsidiary of British Aerospace, Royal Ordnance (now RO Defence), at its facility in Nottingham. The poor performance of the rifle resulted in extensive modification programmes. In �000, BAE Systems was awarded the contract for the largest of these programmes, worth GBP �0 million (USD ��0 m.), for the modification of �00,000 rifle. BAE Systems decided that the work was to be carried out by Heckler & Koch in Germany (Fletcher, �000).7� As a consequence, Royal Ordnance’s small arms manufacturing facility, employing around �00 people in �000, was closed. In �00�, BAE Systems sold Heckler & Koch, in order to focus on core business areas.


phase of the programme was, however, awarded to Thales UK, a subsidiary

of the French military electronics company Thales, in 2003.

A number of minor companies produce specialized military and law enforce

ment small arms and small arms parts. Very little information about these

companies is, however, made publicly available. UK companies are important

producers of ammunition and light weapons. The largest companies in the

field are RO Defence and Thales Air Defence Systems.

The government export report does not provide information on the financial

value of SALW exports. According to the report, around 5,500 ‘weapons and

small arms’ were exported in 2003 (2,700 in 2002), the largest recipients being

Saudi Arabia and the United Arab Emirates (UK, 2004).

Small armsAccuracy International produces sniper rifles and antimatérial rifles (Accuracy

International, n.d.). The company had total sales of EUR 6 m. (USD 5 m.) in

2001, around 80 per cent of which were from exports, and employed 37 people

(Accuracy International, 2002). Armalon produces rifles, pistols, and related

equipment, as well as rifle barrels (having acquired the facility of ParkerHale)

(Armalon, n.d.). Law Enforcement International produces suppressors for

pistols, rifles, and submachine/machine guns.

Light weaponsRO Defence produces ammunition for SALW and mortars, as well as large

calibre ammunition and weapons. The company had around 2,500 employees

by 2004 (FIF, 2004a), down from 3,500 in 2002 (BAE Systems, n.d.). The value

of total sales in 2003 was roughly EUR 400 m. (USD 450 m.) (FIF, 2004a). RO

Defence is owned by BAE Systems and was formed in 2000 through the merger

of Royal Ordnance with the land and naval weapons activities of the military

divisions of the electronics company GEC (Defence Systems Daily, 2000).

INSYS Weapon Systems unit produces the LAW80 antitank weapon.

INSYS was established in 2001 through a management buyout of Hunting

Engineering. The company produces military communication equipment and

detection systems for biological weapons, and supplies a range of management

and advisory services to the UK MoD. The company had total sales of roughly

EUR 80 m. (USD 90 m.) in 2003 and employed 530 people (INSYS, n.d.).

Thales Air Defence Systems in Northern Ireland (formerly Short Missile

Systems) produces the Starstreak manportable antiaircraft missiles (Thales

Air Defence Systems, n.d.). The company teamed up with Saab Bofors of

Sweden for the contract award for the supply of a light antitank weapon to the

British armed forces (see above). The company will be conducting the final

assembly and test of the MBT LAW. Thales Air Defence System is part of

Thales Group, headquartered in France (see above).

PW Defence produces smoke grenades and incendiary grenades. It was

established in 2001 through the merger of the military activities of Pains Wessex,

Haley & Weller, and Schermuly. The company is part of Chemring Group

(CAAT, n.d.). In 2002, Chemring Group was accused of having marketed frag

mentation grenades with trip wire in violation of the landmine treaty (Pallister

& NortonTaylor, 2002).

Manroy Engineering produces heavy machine guns.

Small arms production and BAE Systems: Key events

1986 British Army contract award for SA�0 assault rifles to Royal Ordnance (Nottingham)

1987 British Aerospace acquires the state-owned land arms producer Royal Ordnance

1988 British Aerospace acquires the brand and sales rights to Sterling Armament (sub-machine guns)

1991 Royal Ordnance acquires the Dutch company Muiden Chemie, producer of ammunition propellants

1992 British Aerospace acquires British Manufacture & Research Limited (BMARC), producer of medium-calibre guns and ammunition

2000 British Aerospace acquires the military activities of GEC and changes its name to BAE Systems

2000 Royal Ordnance merges with GEC land and naval weapons business and becomes RO Defence

2000 The British Ministry of Defence (MoD) awards the contract for SA�0 modification to BAE Systems, which decides to carry out the work at Heckler & Koch (Oberndorf)

2000 Closure of the Nottingham small arms factory

2002 BAE Systems sells Heckler & Koch

7� Small Arms Survey Occasional Paper 16 Reinhilde Weidacher Behind a Veil of Secrecy 77

Sights Thales Optronics UK is the prime contractor for the UK FIST programme

(see Thales, France, above).

Hall & Watts Defence Optics produces sights for military SALW, as well

as artillery systems. The company is part of Hall & Watts Group, which also

includes Zengrange Defence Systems, a producer of software for guns and

mortars, which was acquired in 1992, and Marine Air Systems (New Zealand),

a manufacturer of fire control systems for guns and mortars, as well as remote

detonation equipment, which was acquired in 1997.

Imatronic produces laser sights for small arms (Imatronic, n.d.). Pyser-SGI’s

defence products division produces small arms sights and collimators (Pyser

SGI, n.d.). Ring Sights produces military sights, including small arms sights

(Ring Sights, n.d.). United Scientific Instruments produces sights for military

rifles (United Scientific Instruments, n.d.).

Section � Conclusion

It is impossible to provide a reliable estimate of the current size of the military

SALW industry in Western Europe. Information provided by companies is

extremely poor. Most governments provide some information on exports of

SALW. However, data is offered in a format that does not allow for comparison

either across countries or across time.

The focus of governments on exports is legitimate, as it allows them to directly

address concerns related to the proliferation of weapons to those that can be

expected to use them to commit severe violations of human rights and humani

tarian law. Information on exports alone, however, cannot contribute to a full

understanding of the weight and motivations of the interests that drive weapon

exports—nor of ways to counteract or weaken these.

Comprehensive and reliable information is needed about the overall size,

structure, and ownership of companies producing small arms, ammunition,

ammunition manufacturing equipment, and light weapons in order to address

the likely opposition between the search for profits of predominantly private

companies, on the one hand, and the widespread concerns about the negative

effects of the proliferation of SALW to irresponsible endusers, on the other.

A high level of industrial integration within and across countries, through

direct ownership and joint production and development programmes, adds

a new dimension to arms export controls. This has been exemplified in 2004 by

the decision of the minor Austrian small arms manufacturer Steyr Mannlicher

to transfer production rights for its militarystyle weapons to a joint venture

located in a country with a less restrictive arms export regime (Malaysia).

The dependency of European producers of military small arms on sales to

regions outside Europe and North America appears to have decreased during

the 1990s as a result of both the increased competition from nonEuropean

producers and the tightening of export controls in Western Europe. Concen

tration within the European land arms industry since the late 1990s, involving

to a significant degree also producers of light weapons, should allow the creation


of economies of scale within domestic markets and effectively reduce compa

nies’ dependency on export sales.

Available information therefore suggests that possible government interven

tions aimed at further reducing military small arms exports to controversial

recipients would have a minor negative impact on companies and local econ

omies. It is therefore surprising that Western European governments continue

to support the export of SALW to highly controversial recipients. The most recent

example of an economically irrelevant export that is at clear risk of contributing

to the severe violation of human rights is the sale of Steyr Mannlicher heavy

sniper rifles to Iran in early 2005.

Ap

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Cou

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PistolsRevolvers

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Endnotes

1 The following countries are included in the survey: Austria, Belgium, Denmark, Finland,

France, Germany, Greece, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzer

land, and the UK.

2 Small arms production in Russia has been mapped in Pyadushkin (2003); an overview of

SALW production in Eastern, Central, and Southeast Europe is given in Kiss (2004); while

regional overviews are regularly provided in the annual Small Arms Survey.

3 See also Small Arms Survey (n.d.; 2004).

4 See, for instance, Christi (2000).

5 Information requested included data on total sales, sales to military and police forces, and

sales to foreign customers, as well as the number of employees.

6 Copies of the annual report of Herstal and its subsidiaries, including FN Herstal, can be

obtained from the National Bank of Belgium (NBB) at <http://www.nbb.be>, go to

Centrale des bilans.

7 Copies of the annual report of Beretta Holding can be obtained from the chamber of

commerce, Camera di Commercio in Brescia at <http://www.bs.camcom.it>.

8 Financial statements of the companies can be requested from the local authorities:

Amtsgericht Rottweil (Firmenbuch), Germany, for Heckler & Koch, at <http://www.baden

wuerttemberg.de/sixcms/detail.php?id=5382>; and Landesgericht Klagenfurt, Austria, for

Glock, at <http://www.gericht.at/>.

9 General Dynamics completed a series of acquisitions of Western European land weapons

producers in recent years and created a European Land Systems unit in the autumn of

2003. GIAT Industries is carrying out a drastic streamlining of its activities, to be completed

by 2006. In mid2004, BAE Systems, owner of the land arms company RO Defence, announced

its decision to acquire the British military vehicles company Alvis, including former Vickers

land arms, and the Swedish Hägglunds. The German company Rheinmetall, which has

acquired a number of Swiss, Italian, Dutch, and German land arms companies since the

late 1990s, announced streamlining efforts in 2004.

10 Detailed notes on sources for data and information are provided in the main section of the

survey.

11 These are Hirtenberger (Austria), Patria (Finland), TDA and Titanite (France), Hellenic

Defence Systems (Greece), Otobreda (Italy), EXPAL (Spain), RUAG (Switzerland), and RO

Defence (UK). Insufficient information is available about the Portuguese Indep.

12 These are GIAT Industries (France), Hellenic Defence Systems (Greece), MBDA (France,

Germany, UK), Dynamit Nobel Defence (Germany), Instalaza (Spain), Saab Bofors Dynamics

(Sweden), and INSYS (UK). Rheinmetall and Diehl coproduce an Israeli antitank weapon.

No information is available about current production of antitank weapons, including missiles,

by Gyconsa (Spain), a subsidiary of the military electronics company Indra.

13 Communication of the Austrian Original Equipment Manufacturers (Vereinigung Österr

eichischer ZulieferExporteure) to the Stockholm International Peace Research Institute

(SIPRI) Arms Production Project, April 1997.

14 Ferlach in Kärnten is a traditional firearms centre; see Ruhm (2002).

15 ‘Wir produzieren hierzulande künftig kein Kriegsmaterial mehr. Ich habe es als Geschäfts

mann satt, in Österreich mit meinen Produkten in die Nähe von Drogendealern und Zuhältern

gerückt zu werden’ (Profil, 2004). See also IPPNW (2004).

16 See, for instance, Christi (2000).

17 Information about the association can be found at the website of AGORIA, the Belgian

‘multisector federation’, at <http://www.agoria.be/genen/homeen.htm>.

18 Official arms export data refers only to military goods in a strict sense and does not include

a wide range of military electronics produced by Belgian companies; see Belgium (2003).

19 The value of exports of large, medium, and smallcalibre ammunition and SALW amounted

to roughly EUR 410 million in 1991 at 2002 prices.

20 See New Lachaussée (2004).

21 See Pax Christi Vlaanderen (2004).

22 Information about MECAR can be found in the annual report of the parent company, Allied

Defense Group, at <http://www.allieddefensegroup.com/investor_sec.html>.

23 Herstal owns 11 per cent of the Japanese producer of hunting rifles, Miroku.

24 See also Mampaey (2003).

25 See Guzmán (2000).

26 See <http://users.belgacom.net/jm.armes/FNusine/FN_histo.htm>.

27 See the parliamentary debate (November 2003) on the issue at <http://nautilus.parlement

wallon.be/Archives/2003_2004/CRA/cra08.pdf>.

28 See also Jane’s Information Group (2004b).

29 See Lapua at <http://www.lapua.com/history.html>.

30 Eurenco is owned 60 per cent by Groupe SNPE and 20 per cent each by Patria Industries of

Finland and Saab of Sweden.

31 See DGA (2004), data appendix.

32 See en. 30.

33 SFIM had annual sales of roughly EUR 240 million (at current prices) at the time of acquisi

tion; see SAGEM (1999).

34 Thales Optronics, part of Thales Nederland, former Hollandse Signaal, acquired by Thales,

then ThomsonCSF, in 1990.

35 Fifty per cent of Pilkington Optronics was acquired by Thales (formerly ThomsonCSF) in

1990, the remaining share in 2000; see Thales UK (n.d.).

36 See also Cour des Comptes (2001).

37 Accounts for the French part, MBDA France, can be obtained through Societe.com at

<http://www.societe.com/pages_html/index2.html>.

38 See, for instance, Hanel (2003). According to the arms industry, combined indirect and direct

employment dropped from 400,000 people to 80,000 within the same period (Haas & Knust,

2004).

39 Besides the abovementioned companies, the largest producers are JG Anschutz and Suhler

Jagd und Sportwaffen (SJS), with around 150 employees each. SJS was acquired by Heckler


& Koch in 2003. According to the government arms export report, the combined value of

export authorizations for military, police, and civilian small arms amounted to around

EUR 438 m. (USD 414 m.) in 2002, only EUR 61 m. (USD 69 m.) of which was for military

style small arms (Germany, 2003, pp. 28ff.). According to foreign trade statistics, the value

of civilian and law enforcement small arms exports (categories 9302, 9304, 9305) was EUR

161 m. (USD 182 m.) in 2003, and EUR 160 m. (USD 199 m.), EUR 132 m. (USD 164 m.), EUR

136 m. (USD 169 m.), EUR 129 m. (USD 160 m.), EUR 126 m. (USD 157 m.), and EUR 122 m.

(USD 152 m.) in 2002, 2001, 2000, 1999, 1998, and 1997, respectively (at current prices)

(Germany, 2004).

40 The value of export authorization for military small arms amounted to EUR 5 m. (USD 6 m.),

EUR 16 m. (USD 20 m.), EUR 23 m. (USD 29 m.), EUR 21 m. (USD 26 m.), EUR 9 m. (USD

11 m.), and EUR 39 m. (USD 49 m.) in 1996, 1997, 1998, 1999, 2000, and 2001 (at current

prices), respectively.

41 Within the official export statistics, light weapons are included in a broader category of

medium and largecalibre weapons.

42 Company communication, 5 March 2004.

43 Fritz Werner was the only foreign company allowed to set up a joint venture company in

Burma prior to 1988 and continues to be involved in the establishment of industrial plants

in the country within diverse sectors (Institute for International Economics, n.d.).

44 Germany, Greece, the Netherlands, Turkey.

45 See Handicap International Deutschalnd at <http://www.handicapinternational.de/

landminen/minen_nobel.html>.

46 A comprehensive analysis of the company’s military activities up until the late 1990s is

provided in Lock (1999).

47 The company produced parts for AK47 and sniper rifles in the past, but fully converted to

civilian production after it went bankrupt and was acquired by the Beteiligungsgesellschaft

für den Wiederaufbau Thüringens and Steyr Mannlicher in 1993 (Ober österreichische

Nachrichten, 1994).

48 A detailed and comprehensive chronology of Heckler & Koch is provided in Grässlin &

Maertens (2004).

49 See also Grässlin (2001) and Grässlin & Maertens (2004).

50 See Valmas (2003).

51 Estimate based on information in the company annual report for 2003; see <http://www.

finmeccanica.it>.

52 A comprehensive analysis of small arms production in Italy is provided in Brunelli (2003).

53 See Gardone Valtrompia (2004).

54 See also Missionari Saveriani (2002).

55 See <http://www.camera.it/_dati/leg13/lavori/stenografici/sed267/41790001.htm>.

56 See company information at Associazione Industrie per l’Aerospazio, i Sistemi e la Difesa

(AIAD), <http://www.aiad.it/dettagliRepertorio.asp?ID=136>.

57 The AR70/90 is in service with the armed forces of Jordan, Lesotho, and Paraguay (Jane’s

Information Group, 2004a).

58 These were Bahrain, Brazil, Burkina Faso, Chile, Gabon, Guyana, Indonesia, Iran, Libya,

Nigeria, Saudi Arabia, Somalia, Sudan, Tunisia, and Venezuela (Jane’s Information Group,

2004a). According to Amnesty International, 5,000 PM12 submachine guns were exported to

Algeria in 1999 (see <http://www.promiseland.it/view.php?id=514>).

59 See <http://world.guns.ru/handguns/hg07e.htm>.

60 Rheinmetall acquired onethird of the stateowned Eurometaal in 1996 and increased its

stake in the company in the following years.

61 See NISAT (2004), country profile for Norway.

62 In 2003, the company was accused by the NGO Norwatch of exporting licences for dumdum

bullets (Stenerud, 2003).

63 See Centre d‘Estudis (1997; 2004).

64 General Dynamics created a European Land Combat Systems unit in October 2003, integra

ting Santa Bárbara Sistemas, the Swiss military vehicle company Mowag (acquired in March

2003), and the Austrian military vehicle company Steyr Spezialfahrzeug (acquired in October

2003). Within the European unit, and even more so within General Dynamics, the weight of

small arms production in terms of sales and employees is marginal. See General Dynamics

Corporation (2003).

65 The CETME rifle was adopted by the postwar West German military in 1957 and produced

under licence by Heckler & Koch.

66 See en. 30.

67 The Association of Swedish Defence Industries (FIF, 2004b) provides detailed annual statistics

for its member companies.

68 See also Hug (2003).

69 Employment within the company’s foreign subsidiaries was as follows: the German sub

sidiaries JP Sauer & Sohn and Blaser employed 350 and 125 workers respectively; SIG Arms

Inc. in the USA, 120 (Schaffhauser Nachrichten, 2000).

70 CHF 14 m. (10 m.), 16 m. (10 m.), 12 m. (7 m.), and 13 m. (8 m.), in 2003, 2002, 2001, and

2000, respectively (Swiss government arms export report, published by the State Secretariat

for Economy (SECO); available on the NISAT Web site at <http://www.nisat.org>).

71 See RUAG (2004c).

72 Ammunition factories (Altdorf and Thun); explosives factory (Wimmis); Swiss Aircraft

Factory (Emmen); armaments factory (Bern); construction facilities (Thun); parts of the part

of the Air Force logistic group, as well as of the military depot; see <http://www.antiwto.ch/

reitschule/antiwto/texte/handgranaten_aus_thun.shtml>.

73 See also Gander (2000) and BBC News (2000).


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